Tag: Business

IF ONE concern unites Americans, it is the high prices of prescription drugs. One incident in particular tarnished much of the pharma industry: in 2015 the price of an antiparasitic drug, Daraprim, jumped from $13.50 to $750 per pill. But large price increases remain stubbornly commonplace (see chart). According to IQVIA, a health-data firm, the wholesale prices of leading drugs such as Humira, Enbrel and Lyrica increased by more than 120% between 2012 and 2017. Other data show that cancer-drug prices rose from about $10,000 to over $100,000 per year in just over a decade to 2012. Further ahead, a new generation of cures, such as a gene therapy for haemophilia, may cost more than $1m.

President Donald Trump, never one to avoid stoking a grievance, has waded in, accusing the pharma industry of “getting away with murder”. This week, as The Economist went to press, he was scheduled to deliver a speech outlining a strategy to lower prescription-drug prices. Whatever he says, though,…Continue reading

TWENTY years ago schoolyard fads revolved around clothes and music. Now they are as likely to involve video games. The latest must-have is “Fortnite Battle Royale”, a lighthearted multiplayer shooter in which up to 100 players parachute onto a continually shrinking playing field, hunt each other down and compete to be the last one standing.

It is wildly popular. One estimate is that it had 45m players in March. A match broadcast on YouTube, and featuring some of that site’s stars, attracted more than 1.1m concurrent viewers, making it one of the most watched streams ever. Other big publishers, such as Activision-Blizzard, are pondering jumping in with clones of their own. Parents blame it for unfinished homework and for corrupting their children’s oh-so-pure minds. Some schools have tried, mostly in vain, to prevent students from playing.

Moral panics are tedious things. But “Fortnite” is interesting for a good reason. It shows the long-established influence within…Continue reading

IN CHINA no company achieved $1bn in annual revenue as quickly as Xiaomi did, in the year following the launch of its first smartphone in 2011. Chinese media initially nicknamed Xiaomi the “Apple of the East” (its literal translation is “little rice”). That was a stretch, even in good times. But within another two years the affordable-handset-maker became the world’s most valuable startup, worth $46bn.

Analysts reckon that it now wants to raise up to $10bn in an initial public offering (IPO) on Hong Kong’s stock exchange which was announced on May 3rd. (Its filing documents disclose neither the valuation that it is seeking, nor a fundraising target.) That could afford it a very generous valuation of as much as $80bn—not far off the $91bn market capitalisation of Baidu, China’s biggest search engine and one of the country’s three “BAT” tech titans alongside Alibaba and Tencent.

Yet only 18 months ago such talk would have seemed outlandish. In 2016 Xiaomi’s sales…Continue reading

JUST over a year ago Harold Hamm, billionaire boss of Continental Resources, one of the biggest shale-oil producers in America, issued a stern warning to his fellow frackers. Drill with restraint or we will “kill the market”, he said. This month the 72-year-old Mr Hamm, son of an Oklahoma cotton sharecropper who went on to become one of the founding fathers of the shale revolution, had a different message. Restraint is working.

The price of West Texas Intermediate (WTI), the light, “sweet” (or low-sulphur) crude that is a benchmark for American producers, rose to $71 a barrel on May 9th, its highest level since November 2014. OPEC, which Mr Hamm once called a “toothless tiger”, is successfully leading efforts to balance the market. Oil prices are partly rallying because President Donald Trump this week pulled America out of the nuclear deal with Iran and said he would reimpose sanctions on a big oil producer. Meanwhile a free fall in Venezuelan production may be further exacerbated by the…Continue reading

Digging in its wheels

MANY Europeans see long-distance coach travel across America as glamorous. That may be a legacy of a Clark Gable film from 1934 called “It Happened One Night”, about a romance between two passengers on a bus travelling from Florida to New York. Modern Americans see it as anything but alluring. It is looked down on as something used only by time-rich, money-poor people who cannot afford to travel by car, train or plane.

Flixbus, a German coach startup which is launching in America on May 15th, wants to change that. On the firm’s flagship route from Nuremberg to its hometown of Munich, winding between snow-capped peaks and picture-book villages in Bavaria, its bus passengers look distinctly affluent. Many on board play on tablets to pass the time; shirts and ties are common. One discerning traveller reads The Economist. Since Flixbus was founded in 2013, its efforts to encourage more people to try coach travel…Continue reading

“DON’T panic yet,” advises the sandwich king of Ohio. Robert Grote is chief executive of JE Grote Company, a family-run firm in Columbus that is a global manufacturer of pizza-preparation machines, bacon-slicers and automated sandwich-makers. Since about half of its $60m or so of annual sales comes from outside America and his firm buys speciality steel from Europe, he is closely following President Donald Trump’s recent efforts to upend the global trading order. Though European executives he knows are alarmed, he says his American peers believe Mr Trump’s threats are probably negotiating tactics and are willing to “let it play out”.

Mr Grote’s relaxed stance might seem reasonable. The Trump administration first caused shock waves on March 8th by unveiling a 25% tariff on imported steel and a 10% tariff on imported aluminium, but quickly granted temporary exemptions to countries responsible for most of America’s imports of those metals. These exemptions were due to expire…Continue reading

So last season

NEAR the end of the antitrust trial over AT&T’s $109bn acquisition of Time Warner, Richard Leon, the presiding judge, asked Randall Stephenson, chief executive of AT&T, what the pay-television market would look like in seven years’ time. Mr Stephenson mused in his folksy Oklahoma drawl that seven years ago his predictions for today would have missed “so hard” when it came to the decline of pay-TV and the rise of competition from Silicon Valley.

The exchange sounds self-deprecating but it highlighted what AT&T argued was a crucial weakness in the government’s case. The Department of Justice, which is seeking to block the deal, has chiefly looked back to the past, not forward to a video and advertising market increasingly shaped by Netflix, Google and Facebook. Many analysts agree, and are cautiously optimistic about AT&T’s chances of a favourable settlement or ruling in time for the deal’s closing deadline of June…Continue reading

WARFARE has been transformed by drones. Using pilotless aircraft armed with precision weapons America can kill its enemies—in, say, the Hindu Kush or Syria—with a click of a mouse. There is a similar shift in economic diplomacy, where Uncle Sam has perfected new weapons that exploit its power over the world’s financial plumbing and over the brainiest parts of the tech industry. In April these weapons were used in anger on big, important firms for the first time. The targets were Rusal, a Russian metals firm, and ZTE, a Chinese electronics company. The results have been devastating—and alarming.

In 1919 Woodrow Wilson called international sanctions a “silent, deadly remedy” and over the next 70 years America deployed them about 70 times, reckons Gary Hufbauer of the Peterson Institute. America achieved its geopolitical objectives only a third of the time, he says. But there was little doubt that it could meet its narrower goal of inflicting pain by halting trade with other countries and by…Continue reading

IN THE mining world the bout has the drama of a heavyweight title fight. In one corner is Ivan Glasenberg, billionaire boss of Glencore, the world’s biggest commodities-trading firm. In the other is Dan Gertler, an Israeli billionaire accused by America of corruption related to his dealings with Joseph Kabila’s government in the Democratic Republic of Congo (DRC).

The prize is a battery mineral, cobalt, which Glencore produces in the DRC and whose value has almost tripled since the electric-vehicle revolution accelerated at the start of 2017. It will be a tough fight. In the DRC Glencore is currently facing the potential loss of one of its biggest mines and sharply higher mining levies, as well as a costly lawsuit. “It’s a shakedown of Glencore,” says an analyst in London.

The clash between Messrs Glasenberg and Gertler, two former business partners, dates back to December, when the American government slapped sanctions on Mr Gertler, accusing him of amassing hundreds of…Continue reading

IT WAS not the sort of do-it-yourself activity that Castorama, a French home-improvement chain, usually promoted. The search engine on the firm’s website started offering customers puerile responses to their inquiries. Its auto-complete text function suggested such intriguing products as a “bollock hammer” or “cock sander”. It also returned offensive anti-Semitic phrases. The firm blamed manipulation by unnamed actors and had to briefly scrap its search function.

That incident, two years ago, was a reminder that much online search occurs within websites. Internet giants such as Google excel at bringing users to sites but once there customers often rely on websites’ own search functions to find products or services. Some firms build their own engines; others use open-source software, such as Elasticsearch, to supply them. The results can sometimes be painfully slow and undiscerning.

As e-commerce grows, so does demand for search systems that are fast, accurate and…Continue reading