In order to answer the question regarding ownership, a recent
paper looked at the large US pharmaceutical companies. Focusing on the years 2004-2014 (due to availability of data), the report noted that big pharma companies had become highly connected to each other through their shareholders. In response to questions from a
journalist, the authors of the paper noted:
“Public companies are increasingly owned by a handful of large institutional investors so we expected to see many ownership links between companies — what was more surprising was the magnitude of common ownership… we frequently find that more than 50 percent of a company is owned by ‘common’ shareholders who also own stakes in rival pharma companies.”
...In 2014, for instance, the largest investor in the three largest pharmaceutical companies (Johnson & Johnson, Merck & Co and Pfizer) was the same (BlackRock). This is the rule, not the exception. These three pharmaceutical companies share other large institutional investors, and are thus connected to each other, as well as to numerous other pharmaceutical companies, through so-called “common ownership links....
. The top owners are BlackRock (Barclays), Fidelity Investments, State Street Global, Vanguard Group and Wellington Management.”
There is perhaps no single face behind Big Pharma, but on the other hand, it seems there aren’t thousands of faces either. It is much more concentrated than one would expect from publicly traded companies.
The question that naturally follows is: who then are the main shareholders of these institutional investors? Taking BlackRock as an example, it turns out that 44% of BlackRock is owned by the investment bank Merill Lynch. Among the remaining shareholders, the names of the same institutional investors mentioned previously are prominent (see below): BlackRock itself, State Street Global, Vanguard Group and Wellington Management. So they own each other, further locking them in a web of mutually beneficial incentives
: if I do well, you do well; if you do well, I do well. The idea of market competition seems rather nominal in light of such mutual dependencies.
