How financialization shapes productive models in pharmaceutical industry

Matthieu Montalban, Mustafa Erdem Sakinc
Work package: 
WP 5
Publication number: 
01 February 2011

Abstract: This study analyzes the effects of financialization and competition on productive models in main pharmaceutical companies and discusses current theses explaining the changes of productive models by the growing pressure of institutional investors and shareholder value management. We provide evidences of an large dispersion of shareholding and an increase of shareholder value distribution for large pharmaceutical companies. We show that large pharmaceutical companies have adopted blockbuster model to maximize their shareholder value, but we show that this process is explained by various complementary environmental transformations, including financialization but also technical change, product market regulations and competition. Stock markets have been used to make large acquisitions, to control the US drug market and refocusing on pharmaceutical segments and blockbusters in particular, led to a growing dependency to stock prices and blockbusters sales. We describe the process of adoption of the model related to financialization and show its main fragilities that blockbuster model, as a dominant productive model for the industry is no more sustainable.