AstraZeneca is a British-Swedish pharmaceutical company with United States Headquarters in Wilmington, Delaware. With presence in over 100 countries, AstraZeneca is not hugely affected by the fluctuations of a single economy, rather, it is affected by global economy and scientific innovation. In the world of pharmaceuticals, AstraZeneca is currently ranked 7th in global sales. AstraZeneca’s largest competitor is United States-based Pfizer, which is currently ranked number 1 in global sales. With the steady growth in the US economy, now is the time for AstraZeneca to acquire SecondSkin and expand United States operations.
SecondSkin is a wearable polymer that mimics the elasticity of youthful skin. However, unlike other anti-aging pharmaceuticals, SecondSkin is not injected into the skin. It is applied directly to the skin and essentially creates a barrier that can be washed away. It was developed at MIT and Harvard, and has obvious cosmetic application. Beyond that, the technology could have significant medical benefits. As the polymer also acts as a protectant to the skin, it can also be used as a parallel treatment for various skin conditions like psoriasis or eczema. It can also be used in conjunction with sunscreens making the sunscreens more effective. (Kolata, 2016)
AstraZeneca currently does not have a presence in the cosmetic pharmaceutical market. The acquisition of this product during its infancy could dramatically increase global sales. SecondSkin’s largest, and most obvious, competition, Botox is projected to reach $2 billion in United States sales by 2018. Botox is owned by Pfizer. (Research and Markets: The Global Botox Market Is Forecast To Reach $2.9 Billion by 2018 at A CAGR Of 14% Says New Report, 2012) Based purely on the economic advances that were made by Botox, AstraZeneca could position themselves to surpass Pfizer’s profits. With that, AstraZeneca’s acquisition of SecondSkin could boost the pharmaceutical industry in general due to its ability to be used in conjunction with other treatments and therapies.
However, a boost to the pharmaceutical industry is not enough. The pharmaceutical climate in the United States has changed in recent years, and a large part of that is due to cuts in research funding.The President and Congress can stimulate or contract the economy through fiscal policy. Taxing and spending are the two means that Congress can stimulate the economy.However, opinions vary greatly on the effectiveness of either method toward stimulating the economy. For example, in 1933, President Roosevelt introduced the New Deal as a means of recovering from the devastating effects of the Great Depression. Supporters of the New Deal cite examples such as
“Between 1933 and 1937 real GNP[1] in the United States grew at an average rate of 8 percent per year; between 1938 and 1941 it grew over 10 percent per year.” (Romer, 1992)
By contrast, many economists argue that the New Deal worsened the effects of the Great Depression.
“In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity” (Sullivan, 2004)
While the New Deal is just one example regarding the results of fiscal stimulus or contraction in regard to the economy, it highlights the struggle policymakers have when attempting to maintain, or stimulate economic growth. There are simply too many variables to consider. However, when it comes to the pharmaceutical industry, spending is the only way the industry can sustain growth through research grants. According to Samuel Young Jr. of the Research Group of the Molecular Mechanisms of Synaptic Function at the Max Planck Florida Institute for Neuroscience, “scientific research and drug development is being defunded — and the promise of funding is so unreliable — such that he predicts that in 20 years, drugs needed to treat grave diseases will not exist.” (Vosbikian, 2016)Simply having a single good idea or product will not sustain a company, especially in pharmaceuticals. According to Public Law 98-417, pharmaceutical companies can only hold a patent on drug for five years (Drug Price Competition and Patent Term Restoration Act of 1984, 1984). It is critical, not only for the pharmaceutical industry, but also for patient health that scientists are able to make innovative advancements. Additional funding to scientific research will be essential to maintaining any growth gained by the acquisition of SecondSkin.
Aside from Congressional help, making sure the U.S. Dollar is strong will go a long way in assuring expanding United States operations are profitable. The Federal Reserve was created by The Federal Reserve Act of 1913. Under Title 12 of the United States Code,
“The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” (United States Congress, 2016)
Unlike Congress, the Federal reserve makes monetary policy mainly through interest rates. By decreasing interest rates on loans, this makes more money available for spending elsewhere in the economy.
However, by law, the purpose of the Federal Reserve is to maintain long-term economic stability and sustainable growth. Therefore, the Federal Reserve’s policy goals are bent toward overall stability. Congress and the President, on the other hand, have different goals by nature. The goal of the politician is best explained by former San Diego Mayor Dick Murphy who said “My belief is the majority of people in politics are just interested in pursuing this career in politics, and doing what's necessary to get themselves re-elected. And if that happens to coincide with the public good, great. But if it doesn't, the public good loses out.” (Murphy, 2016) The overall goal of the politician is getting re-elected, and often that does not coincide with the long-term economic stability that the federal reserve desires.
On par with the objectives of the Federal Reserve, the current chair announced on May 27, 2016 that “It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate.” She went on to indicate that the decision would be based on the economy, and employment rates showing signs of firming. (Davidson, 2016) This seems to indicate that the Federal Reserve is cautiously optimistic about the state of the United States Economy.
The United States is in a perfect position for pharmaceutical growth. However, the best way for AstraZeneca to be a part of that would be through the purchase of SecondSkin and through lobbying efforts in Congress. SecondSkin is a wonderful product with enormous potential in both medicine and cosmetics. But, innovation must be championed by the United States Congress in order to achieve sustainable goals.
Works Cited
Davidson, K. (2016, May 27). Janet Yellen Says the Fed Could Raise Rates ‘in the Coming Months’. Retrieved from Wall Street Journal:
Drug Price Competition and Patent Term Restoration Act of 1984. (1984, September 24). Retrieved from Library of Congress:
Kolata, G. (2016, May 9). ‘Second Skin’ May Reduce Wrinkles, Eyebags, Scientists Say. Retrieved from New York Times:
Murphy, D. (2016, May 28). Re-Elected Quotes. Retrieved from Brainy Quote.com: “
Research and Markets: The Global Botox Market Is Forecast To Reach $2.9 Billion by 2018 at A CAGR Of 14% Says New Report. (2012, May 15). Retrieved from BusinessWire:
Romer, C. D. (1992). What Ended the Great Depression? Journal of Economic History, 757-784.
Sullivan, M. (2004, August 10). FDR's policies prolonged Depression by 7 years, UCLA economists calculate. Retrieved from UCLA Newsroom:
United States Congress. (2016, May 28). 12 U.S. Code § 225a - Maintenance of long run growth of monetary and credit aggregates. Retrieved from Cornell University Law School:
Vosbikian, C. (2016, May 27). Panel covers pertinent issues facing healthcare, reforms to the system. Retrieved from The Daily Princetonian:
[1] GNP: Gross National Product