Uber's IPO stalled out yesterday, stunning both Silicon Valley and Wall Street.
Details: The ride-hail giant priced shares near the bottom of their range on Thursday night. They opened even lower on Friday morning before falling again by market close. In all, Uber lost nearly $6 billion in market cap in its first five hours as a public company.
WASHINGTON (Reuters) - U.S. states filed a lawsuit accusing Teva Pharmaceuticals USA Inc of orchestrating a sweeping scheme with 19 other drug companies to inflate drug prices - sometimes by more than 1,000% - and stifle competition for generic drugs, state prosecutors said on Saturday.
FILE PHOTO: The logo of Teva Pharmaceutical Industries during a news conference held by its CEO, Kare Schultz, to discuss the company's 2019 outlook in Tel Aviv, Israel February 19, 2019. REUTERS/Amir Cohen/File Photo
Soaring drug prices from both branded and generic manufacturers have sparked outrage and investigations in the United States. The criticism has come from across the political spectrum, from President Donald Trump, a Republican, to progressive Democrats including U.S. Senator Elizabeth Warren, who is running for president.
The 20 drug companies engaged in illegal conspiracies to divide up the market for drugs to avoid competing and, in some cases, conspired to either prevent prices from dropping or to raise them, according to the complaint by 44 U.S. states, filed on Friday in the U.S. District Court in Connecticut.
A representative of Teva USA, a unit of Israeli company Teva Pharmaceutical Industries Ltd, said it will fight the lawsuit.
“The allegations in this new complaint, and in the litigation more generally, are just that – allegations,” it said in a statement. “Teva continues to review the issue internally and has not engaged in any conduct that would lead to civil or criminal liability.”
The 500-page lawsuit accuses the generic drug industry, which mainly sells medicines that are off patent and should be less expensive, of a long history of discreet agreements to ensure that companies that are supposedly competitors each get a “fair share.”
The situation worsened in 2012, the complaint said.
“Apparently unsatisfied with the status quo of ‘fair share’ and the mere avoidance of price erosion, Teva and its co-conspirators embarked on one of the most egregious and damaging
price-fixing conspiracies in the history of the United States,” the complaint said.
With Teva at the center of the conspiracy, the drug companies colluded to significantly raise prices on 86 medicines between July 2013 and January 2015, the complaint said.
Representatives of Sandoz, another company named in the lawsuit, did not immediately respond to a request for comment.
The drugs included everything from tablets and capsules to creams and ointments to treat conditions including diabetes, high cholesterol, high blood pressure, cancer, epilepsy and more, they said. In some instances, the coordinated price increases were more than 1,000 percent, the lawsuit said.
The lawsuit also names 15 individuals as defendants who it said carried out the schemes on a day-to-day basis.
“The level of corporate greed alleged in this multistate lawsuit is heartless and unconscionable,” Nevada Governor Steve Sisolak said in a statement.
According to New Jersey Attorney General Gurbir Grewal, more than half of the corporate defendants are based in New Jersey, and five of the individual defendants live in the state.
The lawsuit seeks damages, civil penalties and actions by the court to restore competition to the generic drug market.
Generic drugs can save drug buyers and taxpayers tens of billions of dollars a year because they are a lower-priced alternative to brand-name drugs.
“Generic drugs were one of the few ‘bargains’ in the United States healthcare system,” the lawsuit said.
However, it added, “Prices for hundreds of generic drugs have risen – while some have skyrocketed, without explanation, sparking outrage from politicians, payers and consumers across the country whose costs have doubled, tripled, or even increased 1,000% or more.”
As a result of the drug companies’ conspiracies, it said, consumers and states paid “substantially inflated and anticompetitive prices for numerous generic pharmaceutical drugs” while the drug companies profited.
The lawsuit filed on Friday is parallel to an action brought in December 2016 by the attorneys general of 45 states and the District of Columbia. That case was later expanded to include more than a dozen drugmakers.
Reporting by Doina Chiacu in Washington; Additional reporting by Ishita Palli in Bengaluru and Nate Raymond in Boston; Editing by Matthew Lewis
Facebook has become "one of the world's most dangerous monopolies" and needs to be dismantled, claims an expert from a U.S.-based anti-monopoly group.
"They operate on a business model that's based on deep surveillance of its users and then taking that personal information and allowing actors to target private advertising towards them," said Sarah Miller, deputy director of Open Markets Institute in Washington, which is committed to protecting democracy from corporations.
"We really need to separate out Facebook from Instagram, WhatsApp [companies Facebook owns], and ensure that there is market-based accountability, so that users have real choice and don't have to use a social media system that relies on manipulation and exploitation of deeply private information to connect with others online," she told The Current's guest host Gillian Findlay.
In an opinion piece published Thursday in the New York Times, Facebook co-founder Chris Hughes wrote that he wants to see the social network break up.
In a country with "a tradition of reining in monopolies," the power of Facebook CEO Mark Zuckerberg is "un-American," Hughes said.
He co-founded Facebook in 2004 at Harvard University with Zuckerberg and Dustin Moskovitz. Hughes quit Facebook in 2007 and later said in a LinkedIn post that he made $500 million for his three years of work.
Miller described Facebook's business model as "incompatible with democratic societies."
She suggested that U.S. antitrust laws, which are designed to promote market competition, should be part of the solution in keeping the company in check.
However, Facebook disagrees with the idea that the company needs to be dismantled.
"Facebook accepts that with success comes accountability. But you don't enforce accountability by calling for the breakup of a successful American company," said a statement that Nick Clegg, the company's vice-president of global affairs and communications, provided to The Current.
"Accountability of tech companies can only be achieved through the painstaking introduction of new rules for the internet. That is exactly what Mark Zuckerberg has called for. Indeed, he is meeting Government leaders this week to further that work."
To learn more about whether breaking Facebook up would address people's concerns, Findlay spoke to:
Click 'listen' near the top of this page to hear the full conversation.
Written by Kirsten Fenn. With files from CBC News. Produced by Julie Crysler and John Chipman.
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Going public is shining an uncomfortable light on the business models of Uber and Lyft.
And, no, we’re not just talking about the ride-booking companies’ chronic struggles to make money.
Just as problematic is the mood of the millions of drivers that underpin the operations of these two superstar technology companies. And many are not happy – about arbitrary pay changes, long hours, lack of benefits and, most notably, their tenuous status as independent contractors.
Strikes and demonstrations in cities around the world this week suggest a troubled future for the two ride-hailing companies.
Both Uber and Lyft acknowledge the inherent tension between making money and keeping drivers happy. The conflict is highlighted as an evolving business risk in the companies’ recent filings for their initial public offerings.
Uber went public on Friday, six weeks after smaller rival Lyft.
Uber says that if it’s forced by law to reclassify drivers as employees instead of independent contractors, it “would require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition.”
Likewise, Lyft said if the contractor status of drivers was challenged there may be “adverse business, financial, tax, legal and other consequences.”
Drivers often work exclusively for one of these companies. But they get none of the things most people associate with a normal job, including overtime pay, sick days, vacations or health and pension benefits. And they generally are not eligible for minimum wages, workers’ compensation or employment insurance.
Fares are calculated by algorithms that are unseen to them, and constantly changing.
Perhaps unsurprisingly, both companies say they are already the target of numerous legal challenges in multiple jurisdictions over the job status of their drivers. Earlier this year, Uber settled a US$20-million class-action lawsuit with drivers in California and Massachusetts over the issue. An additional 60,000 claims remain unresolved.
And the legal environment is not trending in Uber and Lyft’s favour. Recent court decisions in California, Britain, France and elsewhere are redefining the legal status of certain gig-economy workers by recognizing more of them as employees rather than contractors. Elsewhere, regulators are getting out in front of the courts with more driver-friendly rules.
Lyft said it is “regularly” the target of lawsuits, claims and government actions challenging the classification of drivers as independent contractors.
Lyft and Uber have become wildly popular with users. Part of that appeal is because their easy-to-use apps allow customers to easily book, pay for and track rides on their smartphones.
But it’s also because these services are typically less expensive than taxis, which operate in a higher-cost, more regulated environment.
Here’s the existential challenge for Uber and Lyft: They’re losing a lot of money now in a largely unregulated world. If the laws change, and drivers become employees, it’s hard to imagine either company will ever make big profits.
Lyft lost US$1.1-billion in the first quarter of this year. That’s on top of a US$911-million loss in 2018 on revenue of US$2.2-billion. Uber had a large operating loss last year, but managed to post a profit of US$997-million on revenue of US$11.3-billion thanks to one-time gains from asset sales.
Neither company has ever made money on its core business. Not even close.
For a peek at the future, Uber and Lyft might want to consider the experience of Montreal’s Téo Taxi, which ceased operations in January amid mounting losses. Billed as a socially responsible rival to Uber, the company treated its roughly 460 drivers as employees. They earned hourly wages, worked a set number of hours per week, and received benefits and vacation time.
And the business failed.
In spite of all this, investors apparently see a lot of potential. Uber went public this week at a price of US$45 a share, putting the company’s stock-market value at more than US$82-billion. Lyft has a market value of nearly $16-billion, although that’s down more than 20 per cent since its IPO.
Investors would be wise to look carefully at what’s under the hood – and who’s behind the wheel – before they hitch a ride with either company.
Until Uber and Lyft can show they can thrive on the strength of their technology, rather than on the backs of drivers, their business models will remain shaky.
A fuel truck driver has been charged with dangerous driving after the vehicle hit a plane at Toronto’s Pearson airport.
Five people were taken to hospital with minor injuries after the truck collided with an Air Canada plane on the tarmac at around 1:36 a.m. Friday morning.
The aircraft was taxiing to its gate, according to a spokeswoman for the Greater Toronto Airports Authority, which operates Pearson.
Peel Regional Police told CP24 the truck driver was charged with one count of dangerous driving.
Flight 8615, an Air Canada Express flight operated by Jazz Aviation, was cleared to taxi to the gate after landing when the collision happened, Debra Williams, communications manager for Jazz Aviation said.
“The aircraft came to a full stop and the crew deplaned passengers quickly and they were escorted into the terminal building,” she said.
“EMS arrived to assess passengers and crew. Three crew and two passengers were transported to hospital for further assessment.”
All injured have now been released from hospital.
The aircraft was a Dash 8-300 with 50 passengers and three crew members onboard.
The flight was en route to Sudbury when it was forced to turn back due to fog.
Toronto Pearson International Airport confirmed the incident in a tweet.
“At 1:36a.m. an Air Canada Jazz aircraft came into contact with a Menzies fuel truck while taxiing on the apron,” Toronto Pearson tweeted.
“Airport emergency services responded. Passengers and crew evacuated safely to T1. The aircraft and vehicle were removed and no operational impact at the airport.”
The Transportation Safety Board said Friday it has sent a team of investigators to Pearson to probe the incident.
The extent of damage to the aircraft was not immediately clear.
---- With files from The Canadian Press
