The major pharmaceutical companies are facing quite a predicament. Billions of dollars worth of patent-protected drugs have already gone or are preparing to go generic over the next few years. Dubbed the “patent cliff”, the loss of these blockbusters and other major money-making drugs for the largest pharmaceutical companies is enough to make any investor cringe. For dividend investors, it’s especially troublesome as some of these drugs have been the driving force behind Big Pharma’s status as dividend safe havens.
Rather than resignedly driving over the cliff, Big Pharma has at least begun to pump the brakes and look for alternatives. As a result, Big Pharma has found itself diving head first into biotech manufacturers and their lucrative cures for rare diseases.
Except, it turns out that biotech may not be the panacea they hoped for. Regulation and public scorn could crimp the ability of the biotechs – and correspondingly Big Pharma – to charge an arm and a leg for the medications.