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RE - Pharma. I`ve read some thoughts from Buffett on the pharma industry it seems he prefers the larger companies that dominate in vaccines as this is a far more stable area of the market. Ie Glaxo. I`m interesting in your thoughts on value destruction through generics, patent expiry, and research costs. In general is it a sector to avoid like tech? It is certainly outside my circle of competence to predict. However there are some attractive opportunities around such as Astrazeneca and Eli Lilly with stable / growing earnings trading on single digit PERs, earnings visibility is not so clear

The biggest concern I have that keeps me from investing in pharma is the threat that as the U.S. goes broke due to the impossibly-high costs of Medicare/Medicain, it becomes fairly likely that they will institute some form of price controls on the industry. I don't have numbners to prove this, but I suspect that since the U.S. is the only big nation that doesn' have government-forced price controls on medications, that the lion's share of profits for the industry comes from US. So when we jump on board with the rest, pharma is going to be in a tough spot. Of course no one wants to wipe them out, but they will push them to mediocre profitability.

There are enough problems trying to find businesses that can achieve and sustain above-average profitability in a free market. To me, it's just not worth the bother/risk to also have to factor in massive governmental interference.
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