Continuing with our thesis that 70 million boomers will radically transform the American business landscape, we decided to take a look at big pharma through the boomer lens. We headed over to CMS.gov which provides an interesting data ‘land ho’ on where medicare spends most of its money with big pharma.
We downloaded three sets of data and captured three screen shots for medicare part D and medicaid and medicare part B. We wanted to know which companies are generating the most revenues from medicare and medicaid patients as it follows that this trend will likely continue as the American population ages and 70 million boomers hit retirement age in 2030. We need to caution you that these numbers are as terrifying as an upcoming hurricane!
The first chart is shows cumulative spend from 2015-2019 for Medicare Part D drugs. The hope is to analyze what medications medicare is paying for now and how that might increase as the boomer generation enrolls in medicare.
It turns out Gilead Sciences scores nicely with government social health programs as they are the number one receiver of medicare money followed by Novo Nordisk, Astrazeneca and others.
We also analyzed medicaid spend.
We wanted to know where medicaid money went too.
Once again, Gilead Sciences scored big with government health programs. We were so impressed with Gilead’s performance and its dividend that we opened a small position and may add more on pullbacks or market corrections in the future.
In a future post, we will dive into the specific drugs being paid by medicaid vs medicare patients but for now, we have a starting list of companies to research using our Pareto Principle of analyzing where the bulk of the income is generated. Remember, we want to position our investments into a combination of defensive mode and growth mode so it’s important we run through the research process. Keep in mind that these numbers are related only to Medicare/Medicaid spend, these companies also generate revenue from private health insurance and other customers globally but we think it might be a good proxy for what the health care environment might be for 2030.
Stay tuned….
Disclosure: As of the posting of this article, we have a position in Gilead Sciences.
[…] while back we began some high level research into where big pharma was making money. We started with a review of pharmaceutical spend by […]