The Opioid Crisis
In October of this year, three of the biggest U.S. drug distributors and a drug manufacturer reached a $260 million settlement with two counties in Ohio that had sued them over the opioid crisis. The counties claimed the drug companies launched an aggressive marketing campaign to promote the highly addictive medications without sounding satisfactory warnings about the risks. The settlement by no means ends litigation over the opioid crisis; nearly 3,000 lawsuits, filed by city, county and tribal governments, are still active.1
The cost of drugs continues to soar in the U.S., with more than 3,400 medications experiencing price hikes during the first half of 2019. About 40 of those drugs increased prices by more than 100%, while certain others increased by substantially more — as much as 879%.2 Both President Donald Trump and lawmakers have been trying to find ways to put a cap on drug spending growth but legislative efforts have been hampered by the current political climate.3
Big Pharma’s global market is poised for growth as the population ages. In 2018, the pharmaceutical industry grew to a market capitalization of $1.2 trillion — up $100 billion from 2017. By 2023, the market is projected to reach $1.3 trillion.4
The drug market typically represents a long-term investment, given the time it takes to develop, test and bring new drugs to the public. However, one perhaps underappreciated benefit is that many well-established pharmaceutical companies have been known to pay out reliable dividends. This may be attractive to investors who want income from their retirement portfolio.5 However, it is important to understand dividends are paid at the discretion of the board of directors and are not guaranteed.
The China Market
China is the second-largest pharmaceutical market in the world at $122.6 billion, and industry observers expect that number to grow to as much as $175 billion by 2022. The country is working to expand its presence in the sector and export more generic drugs as part of its “Made in China 2025” plan.6
It’s up to each of us to create a strategy to help pay for potential future health care expenses. If you are concerned about having enough income in retirement for expenses like prescription drugs and other health care costs, give us a call. We can help you consider your available options.
Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials provided by Infinity Marketing Services.
1 Brian Mann and Colin Dwyer. NPR. Oct. 21, 2019. “Opioid Trial: 4 Companies Reach Tentative Settlement With Ohio Counties.” https://www.npr.org/sections/health-shots/2019/10/21/771847539/opioid-trial-4-companies-reach-tentative-settlement-with-ohio-counties. Accessed Oct. 24, 2019.
2 Amy Baxter. HealthExec. July 3, 2019. “Drug prices are soaring in 2019.” https://www.healthexec.com/topics/healthcare-economics/drug-prices-are-soaring-2019. Accessed Oct. 24, 2019.
3 Kate Patrick. Inside Sources. Sept. 25, 2019. “Republicans Divided Over Drug Price Control Legislation.” https://www.insidesources.com/republicans-divided-over-drug-price-control-legislation/. Accessed Nov. 6, 2019.
4 Jocelyn Aspa. Investing News. Oct. 17, 2019. “Why Consider Investing in Pharmaceutical Stocks?” https://investingnews.com/daily/life-science-investing/pharmaceutical-investing/investing-in-pharmaceutical-stocks/. Accessed Oct. 24, 2019.
5 Jeff Reeves. US News & World Report. May 16, 2019. “9 of the Best Pharma Stocks to Buy for Income.” https://money.usnews.com/investing/dividends/slideshows/best-pharma-stocks-to-buy-for-income. Accessed Oct. 24, 2019.
6 Huileng Tan. CNBC. April 19, 2018. “China’s pharmaceutical industry is poised for major growth.” https://www.cnbc.com/2018/04/19/chinas-pharmaceutical-industry-is-poised-for-major-growth.html. Accessed Nov. 6, 2019.