Updated Jan 16, 2018

Pharma's accounting games

The SEC has warned companies about using misleading numbers. Photo: Chip Somodevilla / Getty Images

The largest U.S. pharmaceutical companies are among the most profitable entities in the world, but they also routinely report figures that paint a much rosier picture of their financials, based on a report from the bank Credit Suisse.

Why it matters: The Securities and Exchange Commission has warned companies not to use misleading financial statistics, or else face penalties.

The details: Credit Suisse analyzed financial filings of eight major drug companies by comparing their profits based on generally accepted accounting principles (GAAP) versus their profits that excluded the effects of one-time items like layoffs or merger expenses (or non-GAAP).

The report found "the spread between GAAP and non-GAAP results has widened." A drug company's non-GAAP profits were 80% higher on average than their actual profits over the past four years.

The biggest users of the accounting games were Allergan and Teva, according to Credit Suisse. Over the past 15 quarters:

  • Allergan had a net loss of $13.8 billion, but after taking out amortization and numerous other items, the company reported a non-GAAP profit of $17.3 billion.
  • Teva reported a $229 million net loss and a $17.5 billion non-GAAP profit.

Between the lines: Most of the biggest drug companies are still flush with cash and benefit from the prices of their products, even though they often dress up their numbers.

Get smart: Always look at a company's net income and GAAP numbers first.

Go deeper

How to understand the scale of American job decimation

Data: U.S. Bureau of Labor Statistics via St. Louis Fed; Chart: Andrew Witherspoon/Axios

Sentence from a nightmare: 6.6 million Americans filed for unemployment last week, a decline from the previous week's 6.9 million.

The big picture: Over the past three weeks, 1 in 10 working-age adults filed for unemployment, Axios' Courtenay Brown notes.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 4:30 p.m. ET: 1,579,690 — Total deaths: 94,567 — Total recoveries: 346,780Map.
  2. U.S.: Total confirmed cases as of 4:30 p.m. ET: 452,582 — Total deaths: 16,129 — Total recoveries: 24,790Map.
  3. Public health latest: U.S. has expelled thousands of migrants under coronavirus public health orderDr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  4. Business latest: The Fed will lend up to $2.3 trillion for businesses, state and city governments — Another 6.6 million jobless claims were filed last week.
  5. World latest: Boris Johnson is moved out of ICU but remains in hospital with coronavirus.
  6. In Congress: Senate in stalemate over additional funding for small business relief program.
  7. What should I do? Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Biden rolls out new policies in effort to court Sanders supporters

Photo: Scott Olson/Getty Images

The Biden campaign announced two new policies on Thursday on health care and student debt that are squarely aimed at appealing to supporters of Bernie Sanders, who ended his campaign for the Democratic nomination on Wednesday.

Why it matters: The policies don't go as far as Sanders' platform, but they signal that Biden is serious about incorporating elements of his former rival's agenda in an effort to help unify the Democratic Party and defeat President Trump in the general election.