Big Pharma’s Cancer Race: After tax reform, companies invest in innovation rather than tax arbitrage

WSJ editorial. Excerpts:

"Last June Lilly bought Armo Biosciences, a trailblazer in immunotherapy treatments that harness the body’s immune system to fight cancer. Lilly CFO Josh Smiley says a lower corporate tax rate is helping his company compete with foreign rivals for biotech start-ups.

Recall how U.S. drug makers a few years ago sought to exploit lower rates abroad with corporate inversions. The GOP corporate tax reform, which cut the U.S. rate to 21% from 35% and allowed businesses to repatriate overseas profits tax-free, has given U.S. drug makers more cash to invest. Now they’re acquiring companies to advance innovation rather than engage in tax arbitrage as they did pre-reform."

"Consolidation can indicate industry sclerosis, but these drug mergers have the potential to be salutary for investors and patients. Big Pharma can provide start-ups with much-needed capital to manufacture breakthrough therapies while investing in more novel treatments. Now if only drug makers could develop a cure for Washington’s political dysfunction."