American Medicine God: Starting by Inheriting a Pharmaceutical Company and Selling Medicine

Time flies, summer goes and autumn arrives.

New York. Wall Street, Morgan Stanley headquarters. *

The conference room window offered a view of the grey Manhattan skyline.

The oval mahogany table was filled with bankers, auditors, and lawyers dressed in Brooks Brothers suits. In front of them lay a thick prospectus (S-1 document), the cover of which bore the blue and white logo of Vought Pharmaceuticals.

“Mr. Corleone,” said Peter, the lead underwriter and a Harvard Business School graduate, “your growth curve is sexy. Very sexy. Revenue has doubled for three consecutive quarters, with a gross margin of 92%. It’s practically a money-printing machine.”

Peter paused for a moment and adjusted his gold-rimmed glasses.

"However, PwC's audit team discovered a small problem."

All eyes turned to the auditor who had remained silent in the corner.

"Regarding this 'Vought Bermuda Ltd,'" the auditor turned to a page in the document, "it's a wholly-owned subsidiary registered in Bermuda. It owns the global patent rights to 'microparticle sustained-release technology.' And your US parent company pays this Bermuda company a 'technology licensing fee' equivalent to 30% of its revenue every quarter."

The auditor looked up, his eyes sharp.

"Mr. Corleone, this has led to a significant reduction in the book profits of Vought Pharmaceuticals (USA), and even losses in some quarters. This looks like a very aggressive transfer pricing strategy."

Transfer pricing. On Wall Street, it's an elegant way of saying "tax evasion." To the SEC (Securities and Exchange Commission), it's a red-card risk!

Victor sat at one end of the table, not speaking, but looking at Thor.

Saul Goodman stood up.

“Radical? No, no, no,” Thor shook his finger. “This is called efficient.”

"Ladies and gentlemen, this is a perfectly legal intellectual property strategy," Saul said, pulling out a chart. "The initial development of the micro-pill technology was indeed in the United States, but to cope with the global market, we transferred the patent rights to our Bermuda subsidiary. This is a standard international tax planning strategy. We are not hiding profits; we are preserving value for our shareholders... that is, for all of you future shareholders."

"If we paid taxes in the US, Uncle Sam would take half of that 30% profit," Saul said, spreading his hands. "In Bermuda, the tax rate is zero. I'd like to ask everyone here, would you rather that money go into the IRS's pocket or into your dividend checks?"

The bankers exchanged glances. A glint of greed gleamed in their eyes.

Nobody likes the IRS. Everyone likes bonuses.

"That's a reasonable explanation," Peter said, closing the file with a smile. "As long as the legal documents are complete, we're fine."

......

November 4, 1983. The last day of the roadshow. Boston.

The Presidential Suite at The Ritz-Carlton Hotel.

Victor loosened his tie and slumped onto the sofa. In the past month, they had flown to twenty cities and met with three hundred fund managers. His throat felt like it was on fire, but he had never felt so clear-headed.

Peter was yelling into the phone.

"No! There's no more quota! Tell Fidelity that if they want shares, they have to accept the offering price of $20! $18 is history!"

Peter hung up the phone, turned to look at Victor, and his face was filled with almost manic excitement.

"This is insane, Mr. Corleone. This is absolutely madness."

Peter picked up a bottle of champagne from the table, poured himself a glass, and his hand trembled slightly.

"The subscription multiple has exceeded 15 times. We originally planned to issue 1000 million shares, but now even if we issue 2000 million shares, they will sell out instantly."

"What about the price?" Victor asked.

“We can set it at $20,” Peter said, “or even higher. That means your company’s valuation has already doubled before it even goes public. That’s the ‘hot’ thing, Victor. Wall Street is like a dog in heat right now, and Vought Pharmaceuticals is the succulent piece of meat.”

Victor stood up, walked to the window, and looked at the Boston night view.

"No," Victor suddenly said, "set it at $18."

"What?" Peter was stunned. "Why? We're leaving money on the table! We could raise tens of millions more!"

"Because I want them to make money,"

"If we set the price at $20, it might only open at $25. But if we set it at $18, it could open at $30. I want the first buyers to feel like they got a bargain. I want them to taste the blood."

“Greed,” Victor said with a smile. “Greed is the best marketing. If they make a fortune on day one, they’ll become my most loyal followers. They’ll help me brag about this company to the whole world.”

Peter stared wide-eyed, speechless for a long time. Finally, he raised his glass.

"You're a genius, Victor."

Victor touched his glass.

"I'm a pharmacist, Peter. I know how to control the dosage."

Just then, Thor walked in.

"Victor, something's up," Saul said with a strange expression, "It's about our old friend."

Victor put down his wine glass and gestured for Peter to go out first.

"What's wrong?"

“Fat Tony,” Saul said in a low voice, “our insider in prison says he’s been acting strange lately. He’s started converting to a religion. And he seems to be trying to contact the FBI, saying he wants to ‘atone for his sins.’”

Victor's eyes instantly turned cold.

"Atonement?" Victor sneered. "Looks like the prison food is too good, giving him extra energy to think about his soul."

"Should I have someone warn him?"

“No,” Victor shook his head, “warnings are useless. When a person thinks he can go to heaven, he’s not afraid of going to hell.”

"Go wire a lot of money to his prison account. A lot of money."

"Why?" Thor asked, puzzled.

"This is called 'toll money,' or 'funeral fee,'"

"Tell the inside man to leak the news about this money. Let everyone in prison know that Fat Tony has struck it rich."

Thor paused for a moment, then realized Victor's intention, and a chill ran down his spine.

"Using someone else to do the dirty work?"

“No, it’s revenge,” Victor walked to the mirror and straightened his tie. “He drove my father to his death and threatened my sister. Letting him die too easily would be disrespectful to my father. I want him to feel what true despair is before he dies.”

"The IPO bell-ringing ceremony is next Friday, right?"

"Yes."

"Very good," Victor said softly, looking at his impeccably dressed reflection in the mirror. "Until then, God belongs to God, and Caesar to Caesar. And Fat Tony to dust!"