2005: What are the long-term prospects of the pharma industry?

AUDIENCE MEMBER: Good afternoon. Scott Jeffords (PH) from Davidson, North Carolina.

The major pharmaceutical companies have faced a myriad of fundamental and legal challenges in recent years.

With that in mind, and given the apparent ongoing nature of those obstacles, how should investors be thinking about the long-term prospects for this very important industry?

WARREN BUFFETT: Well, my answer is, I don’t know. But maybe Charlie will. And it’s — you know, it’s a terrific question.

It’s just that — that industry is in a state of flux now. It does very important things for mankind. It’s historically earned good returns — very good returns — on invested capital.

But it’s going — it could well be that the world will unfold differently for those companies in the future than the past. It may — that may not be the case.

And I’m — I don’t think I’m really qualified to give you a good answer on that because much of it is in the political realm. And my judgment about the — what politicians will do is probably not better than yours.

Charlie?

CHARLIE MUNGER: I share Warren’s agnosticism on the subject. We just throw some decisions into the “too hard” pile and go on to others. (Laughter)