Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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Sanders to Pfizer and Allergan: "I Don't Want Your Damn Merger!"

Sanders to Pfizer and Allergan: "I Don't Want Your Damn Merger!" | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Sanders has asked the Treasury to try to undermine the deal by removing some of the tax strategies, including "hopscotch loans" that companies use after a so-called tax inversion like this one to return offshore profits to shareholders, according to his letter to the department.

"Blocking this inversion would not only be sound fiscal policy, it would also act as a strong deterrent to other companies that are contemplating similar tax scams," Sanders, the ranking member of the Senate Budget Committee, said in his letter.

He pointed to estimates from a tax fairness group stating that stopping the merger would save the U.S. about $35 billion in lost taxes, although some economists have questioned that estimate.

The Treasury, which already has twice made rule changes in an effort to make such deals less palatable, acknowledged receiving the letter and said the department would respond "in due course," The Washington Post reported.

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Despite Patient Centricity "Buzziness," Recent Pharma Mergers Do Not Serve Patients' Needs

Despite Patient Centricity "Buzziness," Recent Pharma Mergers Do Not Serve Patients' Needs | Pharmaguy's Insights Into Drug Industry News | Scoop.it

Yesterday morning, after five spurned bids, AbbVie, the North Chicago-based pharmaceutical giant finally closed in on a deal to buy Irish drugmaker Shire for $54 billion. One key consequence of the deal: AbbVie will change its tax domicile from Illinois to Ireland, reducing its tax rate.


The deal, the largest so called “tax inversion” ever, caps off what feels like an epidemic of acquisitions to escape U.S. taxes in the health care industry.


What is driving the exodus? The U.S. corporate tax rate is now one of the highest in the world, above that of Japan, France, or Germany, and it has not kept pace tax rates in the rest of the world as they have fallen. Unlike other countries, the U.S. taxes revenues made outside its borders, and money held in overseas accounts is taxed if companies want to make use of it in the U.S. Companies like General Electric, Microsoft, Pfizer, and Apple each have more than $50 billion “trapped” overseas as a result of U.S. tax laws that would force them to pay taxes on the money if they spent it in their home country.

Pharma Guy's insight:


Obviously, in this era of so-called "patient centricity" buzziness, these mergers are not undertaken to spur drug development and better serve patients.


"I would argue these mergers have taken a toll on the R&D organization that wasn’t anticipated a decade ago." -- John LaMattina, former Pfizer R&D executive.

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