Tag: Business

“TOO long” was how Li Ka-shing, known fondly by locals as chiu yan (Superman) for his business nous, described his working life when he announced on March 16th that he would be retiring in May. Asia’s pre-eminent dealmaker has been around for longer than his fictional namesake, scoring and selling assets in ports, telecoms, retail and property to amass a fortune estimated at $36bn.

Few expect Mr Li, who will turn 90 this summer, to hang up his cape for good. He says he will stay on to advise his eldest son, Victor Li, who will inherit his two main businesses. The first is CK Hutchison, a conglomerate with interests in power plants, perfume and much in between. It runs 52 ports and owns 14,000 high-street stores, including Watsons at home and Superdrug in Britain. The second is CK Asset, one of Hong Kong’s biggest property developers. Combined they are worth $79.7bn.

At the press conference the younger Mr Li made all the right noises. “When I return to work tomorrow, it will be the same,” he told…Continue reading

Dreaming of lifestyle change

SANAE ABUTA is a manager at Panasonic, a giant electronics manufacturer, in Osaka. One day she may work from 9am to 5.45pm. On another she may take a break in the middle, to go to the bank or see a doctor. Or she will stay with her child in the morning and start at 11am. One day a week she works from home. “I appreciate the flexibility,” she says.

Ms Abuta’s schedule is unusual in Japan. Long office hours are seen a proxy for hard work, itself regarded as the cornerstone of Japan’s post-war economic boom. Companies offer to look after employees for life in return for a willingness to dedicate that life to the company, including “service” (ie, unpaid) overtime or moving house on demand. People hesitate to leave the office before their peers, and certainly before their boss. Some sleep at their desks. Convenience stores sell shirts for workers who have no time to go home and change. Death by overwork is so common—191 people in the…Continue reading

SCOTT GOTTLIEB, the thoughtful head of America’s Food and Drug Administration (FDA), has had a busy first year. He has launched the process of lowering nicotine levels in cigarettes, approved self-testing kits for breast-cancer genes and waved through the most new medicines in two decades, as well as a record number of copycat drugs (see article). There is one thing he and his regulatory agency are doing less of, however—regulating. New rules were at a 20-year low in 2017, according to analysts at PwC, a consultancy. Instead, the FDA is providing more guidance to industry. This approach, Mr Gottlieb hopes, will help pharmaceutical firms in America develop drugs more efficiently. Since that is where most drug development happens, the FDA’s philosophy matters beyond American borders.

Given the rapid pace of scientific advances in…Continue reading

A SINGLE pill of Abilify, a drug used to treat manic depression, costs $30 or so in America. Or you could try gAbilify (the g stands for “generic”), better known to chemists as Aripiprazole. Thrifty pharmaceutical companies, many of them in India, can provide it for less than $1 a pop since the drug’s patent expired in 2015. That is bad news for Otsuka and Bristol-Myers Squibb, the two labs that formulated Abilify and got it approved by authorities in the 1990s. Everyone else, from patients to insurers to the public purse, is correspondingly better off. Generics-makers have thrived, particularly in India. But the prognosis for the industry is less rosy.

India became the world’s biggest exporter of generics almost by accident. Lax intellectual-property rules in the 1980s allowed its firms to crib drugs patented elsewhere for its huge domestic market. Trade deals gradually opened markets abroad. As patents for a wave of drugs from the 1980s expired two decades later, sales of Indian generics…Continue reading

It never walks. But does it run?

IT USED to be the world’s two biggest makers of airliners that would invariably deliver new designs late and over budget. A decade ago the cost of Airbus’s A380 superjumbo soared by about €5.5bn ($6.6bn) after engineers got its 330 miles of cables in a jumble. Boeing’s rival 787 Dreamliner exceeded its forecast costs by a whopping $20bn, give or take; its parts, once assembled, did not fit together properly. But just as both planemakers are mending their ways—Airbus’s A350 and A320neo and Boeing’s 737 MAX arrived in a much more timely and economical manner—manufacturers of the engines which power the aircraft are beginning to stall.

On March 15th Boeing revealed that the new engines, the largest ever made, for its new 777X wide-body airliner had completed their first test flight. But GE, the American engineering giant that built them, is already three months behind with their development, because of hiccups with the…Continue reading

AN ANTITRUST trial over AT&T’s $109bn acquisition of Time Warner, which begins on March 19th, will have more keen observers than one courtroom can handle. Disney, Comcast, 21st Century Fox, Verizon, Charter Communications, CBS and Viacom will be watching. So will Netflix, Amazon and Google.

The reason is simple. If AT&T wins the case against the Justice Department, and the “vertical merger” of the distribution and content businesses goes through, a wave of consolidation deals will follow. Companies that rely on large numbers of people to watch video will want to bulk up to compete with each other and Silicon Valley’s mightiest.

Comcast may make a hostile bid for Fox’s assets, setting off a bidding war with Disney, which has already agreed a $66bn deal with Fox. (Comcast already wants to buy Sky, a European satellite provider that is part of the Disney-Fox transaction.) Other pay-TV and mobile firms, like Charter and Verizon, will feel emboldened to go after content companies such as CBS or Lionsgate. All are…Continue reading

“The Next Steve Jobs”

“THE Next Steve Jobs” is how Inc., an American business magazine, described Elizabeth Holmes when her photograph appeared on its cover in 2015. They may share an affinity for black turtlenecks but the reputations of Ms Holmes and Apple’s celebrated late boss could not be more different. On March 14th Ms Holmes was accused of fraud by America’s Securities and Exchange Commission (SEC). She has agreed to pay a $500,000 fine, not serve as an officer of a public company for ten years and turn over much of her stake in Theranos, the startup she founded (she has neither admitted nor denied wrongdoing).

Only a few years ago Ms Holmes, who is 34 years old, was touted as the world’s youngest self-made female billionaire, a shatterer of Silicon Valley’s reinforced-glass ceiling. She graced magazine covers and speechified about Theranos, which was trying to upend diagnostic testing by using pinprick amounts of blood rather…Continue reading

Windy with a chance of profits

WHEN Johannes Teyssen took control of E.ON in 2010, it was Germany’s second-biggest company after Siemens, an industrial giant. From its headquarters in chic Düsseldorf, the utility looked down on RWE, its longtime rival, based in Essen, a down-at-heel former coal-and-steel town 40 minutes’ drive away.

The illusion of superiority did not last. The following year Angela Merkel, Germany’s chancellor, reacted to the meltdown at Fukushima in Japan by starting a process to shut down Germany’s nuclear-power plants, on which both companies relied. Other aspects of the Energiewende, or energy transition, added to their woes, as lavish support for renewables clobbered the country’s wholesale electricity prices. The companies’ profits slumped, as did their share prices (see chart).

In 2016 E.ON recorded its biggest-ever loss, moved its headquarters from Düsseldorf to Essen, and reinvented itself as a renewable-energy business and a household…Continue reading

PROUDLY overlooking the River Thames, Unilever House looks more royal palace than office building. Built on the site of a Tudor estate, for nine decades it has been the London home to Unilever, one of the world’s largest consumer-goods firms. Since a merger of British soapmakers and Dutch margarine merchants in 1929, Unilever has been a dual-nationality company. It is legally domiciled in Britain and the Netherlands, with headquarters in both the London building and in Rotterdam.

The appeal of dual citizenship has faded. After a year-long review, on March 15th Unilever’s board announced plans to move its legal base to Rotterdam. (The firm will continue to have a listing in London, and claims no British jobs will be lost.) Many in the City of London finger Britain’s decision to leave the European Union for the move. But Graeme Pitkethly, the firm’s chief financial officer, insisted Brexit was “absolutely not a factor” in the decision. Over the past decade Unilever has been shifting its production facilities nearer to its customers in…Continue reading

EVERY year America spends about $5,000 more per person on health care than other rich countries do. Yet its people are not any healthier. Where does all the money go? One explanation is waste, with patients wolfing down too many pills and administrators churning out red tape. There is also the cost of services that may be popular and legitimate but do nothing to improve medical outcomes. Manhattan’s hospitals, with their swish reception desks and menus, can seem like hotels compared with London’s bleached Victorian structures.

The most controversial source of excess spending, though, is rent-seeking by health-care firms. This is when companies extract outsize profits relative to the capital they deploy and risks they take. Schumpeter has estimated the scale of gouging across the health-care system. Although it does not explain the vast bulk of America’s overspending, the sums are big by any other standard, with health-care firms making excess profits of $65bn a year. Surprisingly, the worst…Continue reading