NEW YORK (TheStreet) -- What's $3 billion: a ruinous amount or simply a few bucks between friends, the mere cost of doing business?
That's the operative question when
, or any other company -- think
Johnson & Johnson
-- is fined for malpractices.
The New York Times
termed "the largest settlement involving a pharmaceutical company" (all those others have had to pay settlements in the last couple of years too, though this edges the previous fines out) Glaxo pleaded guilty to promoting a number of drugs, including antidepressants, for unapproved uses and failing to report safety data.
As a trader, here's what you need to know: How much of a fix will this put Glaxo in, and will it impact the way drug companies do business? But the only way to answer this central question is to put Glaxo's fine into perspective.
Too many media outlets don't even attempt it.
NBC News, for example, ran a segment calling the fine "massive," but offering no sense of proportion. This makes the $3 billion (a lot to you and me) sounds onerous.
The New York Times gave you the perspective you need: "Despite the large amount," The Times wrote, "$3 billion represents only a portion of what Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement." Put like that, it is clear: the fine will be rationalized as the cost of doing business and change little.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page.
For his "Business Press Maven" column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers.
Fuchs appreciates your feedback;
to send him an email.