Sovereign wealth funds in Asia and the Middle East have invested in carmakers, oil companies, farmland and, more disastrously, western banks. Yet one potentially appealing sector has been left out of their buying spree: pharmaceuticals.
Most big drug groups are well-run businesses with strong cash flows and solid long-term prospects – just the kinds of companies that strategic investors with an eye to the future should like. True, expiring patents will put pressure on billions of dollars of blockbuster drug sales over the next few years. Yet the industry has been in a similar position before. In the 1960s and 1970s, drugmakers seemed to face the spectre of a broken innovation model as research productivity plummeted. Yet, by the 1980s, new approaches to drug development opened the way to a series of new blockbusters and two decades of bumper profits.
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