I also think that, even assuming that the US was unilaterally “confiscating” these companies’ IP, it’s not clear what the actual impact on future innovation would be, since:
This is clearly a unique situation. It’s unlikely that these corporations would make the assumption that all future IP would also be “confiscated”
Even if they made that assumption, what are they supposed to do? Stop investing in future developments, and slowly go out of business? A much better option would be to just not get any IP protections at all, but instead rely on trade secrets to protect investments. This would probably end in a more competitive market; since the consensus among economists who specifically do research on this topic seems to be that IP laws hurt more than they help.
It should also be noted that these corporations profit from voided IP protections, since they all also produce generic medicinal products.
No, that’s like saying: Needing stock-pilled masks is a unique situation that nobody could forsee.
There might be another pandemic and we want to be prepared for that. We want companies to invest in being able to produce vaccines on short notice in case of a future pandemic and that won’t happen if it’s not lucrative to be able to produce vaccines on short notice in future pandemics.
Stop investing in future developments, and slowly go out of business?
No, just stop investing in pandemic preparedness (or not start to invest).
Even looking more broadly we also prefer that big pharma invests into research instead of investing into stock buybacks.
Pandemics are generally unique situations. Given what we know at the moment, we would expect similar events to occur perhaps two or three times a century. So developing vaccines specifically for pandemics similar in magnitude to what we are going through right now is not a sound investment to begin with.
Neither the Moderna nor the Pfizer stocks dropped very dramatically—both had solid upward trends throughout the past month, and the prices are already bouncing back. Investors make mistakes too.
Using the efficient market hypothesis to access what the true price of a security should be doesn’t work. On the other hand the stock price is a good reflection of what Wall Street thinks and that’s what’s important for how capital gets allocated.
I am a strong believer in reading a short-term reaction to news as the stock market’s true opinion about a development, whether or not one believes the underlying price was reasonable.
When my dad worked at GE, sometimes they would hire people who had worked at Pratt and Whitney. When there was a meeting and the topic started to veer towards trade secrets that the former P&W employee knew, they would “self police.”
Generally speaking trade secrets are much more important than patents.
I also think that, even assuming that the US was unilaterally “confiscating” these companies’ IP, it’s not clear what the actual impact on future innovation would be, since:
This is clearly a unique situation. It’s unlikely that these corporations would make the assumption that all future IP would also be “confiscated”
Even if they made that assumption, what are they supposed to do? Stop investing in future developments, and slowly go out of business? A much better option would be to just not get any IP protections at all, but instead rely on trade secrets to protect investments. This would probably end in a more competitive market; since the consensus among economists who specifically do research on this topic seems to be that IP laws hurt more than they help.
It should also be noted that these corporations profit from voided IP protections, since they all also produce generic medicinal products.
No, that’s like saying: Needing stock-pilled masks is a unique situation that nobody could forsee.
There might be another pandemic and we want to be prepared for that. We want companies to invest in being able to produce vaccines on short notice in case of a future pandemic and that won’t happen if it’s not lucrative to be able to produce vaccines on short notice in future pandemics.
No, just stop investing in pandemic preparedness (or not start to invest).
Even looking more broadly we also prefer that big pharma invests into research instead of investing into stock buybacks.
Pandemics are generally unique situations. Given what we know at the moment, we would expect similar events to occur perhaps two or three times a century. So developing vaccines specifically for pandemics similar in magnitude to what we are going through right now is not a sound investment to begin with.
Do you have a good explanation to Moderna’s market price drop?
Borrow less, invest less, or, as you say in your last line, focus on other ways of making money that don’t require innovation and IP?
Neither the Moderna nor the Pfizer stocks dropped very dramatically—both had solid upward trends throughout the past month, and the prices are already bouncing back. Investors make mistakes too.
1 - it was tiny compared to recent changes
2 - the efficient market hypothesis is quite quite false.
Using the efficient market hypothesis to access what the true price of a security should be doesn’t work. On the other hand the stock price is a good reflection of what Wall Street thinks and that’s what’s important for how capital gets allocated.
I am a strong believer in reading a short-term reaction to news as the stock market’s true opinion about a development, whether or not one believes the underlying price was reasonable.
When my dad worked at GE, sometimes they would hire people who had worked at Pratt and Whitney. When there was a meeting and the topic started to veer towards trade secrets that the former P&W employee knew, they would “self police.”
Generally speaking trade secrets are much more important than patents.