AstraZeneca Investor Questions Big Pharma Model

One of the biggest shareholders in AstraZeneca is questioning the long-term viability of the 'Big Pharma' business model by asking whether it could discourage the development of new meds,

Borje Eckholm, president and chief executive of Investor AB, the Swedish investment group linked to the Wallenberg family that holds a 3.5 per cent stake in AstraZeneca worth more than $2 billion, says a “fundamental question” exists about whether huge, vertically integrated drugmakers make the most effective use of their research funding.

“You have to ask yourself: do you have economies of scale in R&D? It's not clear but one of the fundamental ways that companies create value for shareholders is strong R&D," he tells the paper. "It raises the question: is big better? Maybe you have to split it up into smaller parts.”

Ekholm wonders whether there could be more productive ways of developing new meds, including farming out research to smaller organizations with a more entrepreneurial culture. And he adds there was unlikely to be a silver bullet to the problem for the industry.