Sam Weil's Profile

Great illustration of the negative & disruptive consequences of Brexit. The tariff does seem concerning for the UK’s competitiveness in auto exports but it seems to me that there could be some mitigants; I’m curious if any of these came up in research:
1. Wage cuts: to what extent will Nissan be able to pass the cost of the tariff on to workers in the form of lower wages?
2. Exchange rate: if the lower GBP/EUR exchange rate persists, would that offset the impact of the tariff and leave Nissan roughly where they were before the Brexit vote?
3. Tariff mitigation: could UK industry, including Nissan, influence the course of Brexit to accomplish mutually beneficial trade arrangements between the EU and Britain?

I also wonder to what extent companies will take the growth of separatism into account when allocating production and designing supply chains. Nissan appears to be doubling down on UK manufacturing, but are other manufacturers moving to a more localized production model to hedge against future trade barriers?

Really good article, thanks David. I think you do a good job of articulating why the US3 claims of unfair competition are more an appeal for unwarranted government interference than they are legitimate grievances. But I’m still left wondering, to what extent do government subsidies distort the basis of competition internationally, and could the US3 be on firmer ground in other cases? The fact that the US government has subsidized the US airline industry to the tune of $150bn over the past 50 years (unclear from your post how much of that was pre- vs post- deregulation) doesn’t to me say that other airlines don’t benefit even more from government subsidies. Should the same WTO anti-dumping rules that apply in other industries also apply here? Do you view a healthy domestic airline industry as something of a strategic imperative for a country (similar to other strategically important industries such as agriculture and steelmaking) that merit some loss of consumer surplus in the name of national security and thus worth subsidizing/ protecting? In cases where foreign governments really are “unfairly” subsidizing airlines, what if anything should the US government do about it?

Also curious as an aside the extent to which you’d place the blame for poor customer service in the industry on the FAA and public authorities responsible for airport construction/ enlargement vs. the airlines themselves

Thanks for the interesting take on this aspect of the growth of fast fashion Consuelo. It does seem that the environmental impact of fast fashion is not top of mind for consumers, and I’m not convinced this will change; as Alona points out, the customer promise is cheap, trendy clothing that can be replaced often. Could Zara be chasing the goal of reducing its carbon emissions with no discernible benefit to itself? I’m curious if you see a scenario in which Zara is best served by focusing on its core business and either waiting for governments to put a price on carbon or for public pressure to mount to the point that they’re forced to buy carbon credits to offset their emissions. While it’s possible that either of those remedies would entail higher short-term costs than if they were to gradually transition to a “greener” business model, the value of delaying action could be more than worth it in terms of profits.

Please note this isn’t to detract from the moral imperative to be a good global citizen, and of course in an ideal world we’d have zero pollution and there would be no tradeoffs. But in this case I think the range of options is worth considering; for example, could Zara reallocate the money it’s spending (and profits it’s forgoing) to make itself “greener” to a different cause such as land conservation, public health, vaccinations, or any number of other initiatives that would have a greater impact on aggregate welfare than marginally reducing global greenhouse gas concentrations? I think it’s at least worth considering before firms incur great expense to reduce emissions due to regulatory or consumer pressure.

Thanks for the interesting take on yet another impact of extreme weather on our society. I had no idea that Puerto Rico was so central to US drug supplies due to an unfortunate distortion in the tax code.

I know that your post focused on the FDA, but I’m curious to what extent the pharmaceutical companies are responsible for maintaining supply in the face of inclement weather and to what extent they’ve been working on this without government involvement. The preponderance of goods in our economy don’t have the same sort of bureaucratic involvement and yet seem to have fairly resilient supply chains. I also wonder if there’s a stopgap/ emergency release valve of sorts here, perhaps in the form of allowing drug imports from other countries if US supply reaches a critical level. Further, I wonder if the example of Maria illustrates the danger of a lean supply chain with minimal levels of inventory. In the event of a serious disruption to global trade due to weather or other reasons, how long would patients in the US have access to medicines before shortages took hold? I’m not sure whether government involvement (whether from the FDA or another side) is the right answer here, but holding ample inventory, while wasteful when viewed through a narrow TOM lens, could be a life-saving policy in the long run.

Thanks very much for the article – really interesting to think about Amazon’s approach to entering the healthcare space, particularly in light of recent noise around a partnership with/ acquisition of Cerner (leading hospital electronic health records provider).

I think you’re right to point out that upstream would be a tough slog given concentration among ABC, MCK, and CAH. But one big question I’m faced with is what would make Amazon better than the incumbents in downstream. A few success criteria that come to mind, and thoughts about the incumbent landscape, are:
– Physical footprint: established players have thousands of retail locations (vs <500 Whole Foods locations), which as you've pointed out are the preferred means of receiving drugs among the general population.
– Time sensitivity: the major use case for mail order pharmacy as I understand it is for recurring/ chronic prescriptions, where the predictability of refills nullifies much of the benefit of same- or next- day delivery. Not to mention, a logical response among incumbents to the prospect of Amazon entry would be to offer matching delivery speed, which CVS has done recently [1]
– Lack of consumer involvement: in my view as a consumer, Amazon excels not just because they offer fast shipping (which is increasingly table stakes for ecommerce) but also because of the simple consumer interface and preponderance of options. Given the limited role of the consumer in selecting prescriptions, will these consumer-facing advantages get Amazon very far in the pharmacy space?
– Biologics/ specialty pharmacy: the real growth in pharma spend $ is in biologic drugs, which are often provided by specialty pharmacies (including those owned by incumbents such as CVS) and entail a suite of coordination and higher-touch capabilities beyond shipping boxes to consumers. Would Amazon leave this part of the market to incumbents to focus on the small-molecule/ largely Gx pharmacy business?

The above list isn't meant to be comprehensive, and I don't doubt that Amazon could make a push into the pharmacy business. They could certainly afford to cross-subsidize the offering and starve the incumbents of their profit streams, which while seemingly anti-competitive hasn't triggered a regulatory response to date in their other business lines. But I'm still not clear on why Amazon will be the winner in downstream pharmacy vs other lines of business they may choose to pursue (EHR seems more promising given the IT-intensive nature of the business and woefully poor offerings on the market). My interpretation of the share price hit that incumbents took upon Amazon's announcement was more a recognition that profit pools will be squeezed and incumbents will have to cut costs and improve service offerings to shore up their defenses against a seemingly profit-agnostic entrant rather than a recognition that the incumbents are destined for the dustbin of healthcare history.

1. http://fortune.com/2017/11/06/cvs-free-same-day-prescription-delivery/

Matt, thanks for writing about such an exciting topic. Telemedicine, given advances in telecommunications technology, really does sound like a promising technology.

While I agree that telemedicine could play a meaningful role in a future healthcare delivery system, it seems that there are major challenges to adoption beyond what you’ve mentioned in your article. Beyond insurers and individual physicians, I can imagine physicians’ associations resisting this (to combat outsourcing of their jobs), reluctance of patients (including the poor/ elderly, who are least likely to be in a position to adopt the nascent technology but who most need the intervention), and regulators concerned about privacy, safety, and quality of care.

I’m curious what your take is on how telemedicine providers can overcome these constituencies while combating legitimate threats such as fraud and security concerns.