Despite growing pressure from lawmakers over the pharmaceutical industry’s pricey products, new research shows that pharma relied largely on price hikes for growth in 2016.
A 120-page report from Credit Suisse demonstrated that net price growth made up 100% of net income growth for a variety of companies within the industry, including Biogen (NSDQ:BIIB), Eli Lilly (NYSE:LLY) and Allergan (NYSE:AGN). The report found that net price hikes in the U.S. brought in $8.7 billion in net income for industry leaders – 100% of the sector’s earnings growth.
“Arguably, this is the most important issue for a Pharma investor today,” the report said, according to Business Insider.
The report also noted that rebates went up nearly 2% from 35.7% in 2015 to 37.5% last year. The amount that companies paid to pharmacy benefit managers depended on the uniqueness of their products, with those that had the least unique drugs paying higher rebates compared to those with unique therapies.
In the U.S., pharma list prices grew 9.8% last year, falling behind the 10.8% jump in 2015.
The pharma industry’s drug pricing habits have been in the spotlight over the last year, with President Donald Trump saying that companies are “getting away with murder” in regards to what they charge the government for their products.
But the report from Credit Suisse concludes that price hikes will likely remain a growth driver for years to come, despite the recent political buzz.
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