As large pharmaceutical companies continue to come under fire for the harm their devices and medications have caused patients and their families, the number of lawsuits filed has mounted, causing some to wonder whether the giant companies being sued can weather the storm. A look at the continued growth of the largest drug companies might make you feel less sympathetic to the plight of the drug companies, as they continue to boast billions of dollars in profits and provide shareholders with record returns.
JNJ Dividend Shows Steady Growth amid Numerous Lawsuits
Despite being the defendant in lawsuits involving medications, its talcum powder products and DePuy hip replacement systems, Johnson & Johnson has fared well enough to announce a dividend payout in January of 2017 of $0.80 per share. This is up from the dividend of $0.75 it paid for the fourth quarter of 2015 and shows a dividend growth rate of 6.7% over the last year. The trend has been ongoing for over five decades as Johnson & Johnson continues to faithfully provide lucrative dividend payments to its shareholders.
For over 54 years, shareholders have seen increases in the amount of dividends received, classifying JNJ as part of the S&P 500 Dividend Aristocrats Index. In order to be considered a part of this index, a company must return increases to dividends for more than 25 consecutive years. Over the last ten years, it has produced a dividend growth rate of roughly 8%.
In early January of 2017, JNJ was trading at $116.30, which hovered 23.1% above its 52 week low and produced an 18.3% return. Johnson & Johnson is only one of many extremely profitable drug giants in the world, however. When comparing JNJ to other companies in the medical sector, it becomes apparent that drug and medical device manufacturers have very little to worry about.
Big Pharma a Source of Steady Returns
Over the last year, other large medical corporations have boasted record profits and provided investors with reliable and steady returns. Stryker is another company that has been targeted in numerous lawsuits due to defective hip replacement product, yet investors enjoyed a 38.7% return over the last 12 months. Zimmer Biomet Holdings is also a defendant in numerous ongoing lawsuits, but has delivered a return of 11.9% in the same period.
Thermo Fisher Scientific was the defendant in a recent lawsuit over patent infringement and ordered to pay $35 million to Enzo Biochem in the first of 11 lawsuits filed. The other ten are still ongoing and Thermo Fisher Scientific may be required to provide millions of dollars in additional compensation depending on the outcomes. It remains a profitable company, however, as reflected in its stock value, which has returned a 10.2% profit over the last year.
While big pharmaceutical companies rush new medicines, devices and procedures to market, they are enjoying billions of dollars in profits, but it is the little guy who is paying for the windfall profits investors are reaping. The failure of drug companies invest properly in research, test trials and quality control is costing patients their savings and health while executives are rewarded with fat bonuses and investors are treated to greater dividends every quarter.
Large drug companies do not need our sympathy. When the victims of their callous and greedy actions are awarded the compensation they are entitled to, it will not spell the demise of these powerful giants. It is for this reason that we need tighter regulations and effective oversight so that companies are no longer allowed to continue to place profits over people and returns over lives.