America's Big Pharma Firms Spend More on Shareholders Than R&D and the New U.S. Tax Laws Won’t Change That | Pharmaguy's Insights Into Drug Industry News |

At the J.P. Morgan Healthcare Conference in San Francisco this week, executives of big, U.S.-based pharma and biotech firms spoke approvingly of new U.S. tax laws, saying they will "even the playing field" with foreign competitors, lower effective tax rates and increase financial flexibility.


Several companies, including Johnson & Johnson, Merck & Co. and Eli Lilly & Co., said the laws would not fundamentally change their capital-allocation strategies. If we take them at their word, then what does that mean?


It means research and development spending will be about the same; dealmaking will be opportunistic and difficult to predict; and a lot of money will go back to shareholders in the form of dividends and buybacks.