d. Fragility imperils future development.

As a result of their higher level of indebtedness and strategic dependence on M&As, pharmaceutical companies have become more exposed – and thus vulnerable – to capital market developments as they pursue their financialised model. The current environment of extremely low interest rates and rising stock market valuations has fuelled a boom in M&As. However, the effects of a reversal of these market conditons may have a much more significant impact on pharmaceutical companies than in the past.

The financialised business model has emerged out of a specific historical environment as part of the broader process of financialisation that has taken shape in contemporary societies. Since the financial crisis, however paradoxically, financialisation has intensified rather than weakened. The conditions of extremely low interest rates have helped companies across sectors to increase their borrowing and embarking on new cycles of M&As and share buybacks. This tightening connection between finance and Big Pharma has increased systemic risk by promoting a fragile business model that generates high profits and rewards shareholders and management generously at the expense of the future drug development.