4 ms·

This old trope about "no new drugs" is silly. Most drug companies spend more on marketing than R&D. Add to that, profit margins are insane - they are the highe

This old trope about "no new drugs" is silly. Most drug companies spend more on marketing than R&D. Add to that, profit margins are insane - they are the highest in almost any business, equal to that of banks. [0] Pfizer saw a 42% profit margin in 2013. This industry is insanely profitable, despite spending a ton on R&D, and more on marketing. Multi-billion dollar fines are just part of doing business. Nature abhors a vacuum, especially such a profitable one. There's no shortage of companies willing to make that margin on billions in revenue. Drugs are vastly overpriced, and the old line about how it's necessary to recover costs (along with long, exclusive patent rights) is false. [0] http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223

refurb 11y ago
This old trope about "no new drugs" is silly. Most drug companies spend more on marketing than R&D. I'm not sure what you're getting at. The idea with marketing is to spend $X to get $X+Y in sales, otherwise you wouldn't do any marketing. So if drug companies stopped marketing, they'd have less money than they do now. And as for "the most profitable industry". Do you know how many biotechs go under because their drug fails? How many banks does that happen to? You can't just look at the ones that succeed and say "that's typical". It's called survivorship bias. And as for Pfizer's 42% profit, you're cherrypicking. Note that in your source, most companies have a profit of 10-20%. Which is pretty decent considering the risk involved with R&D. Pfizer had a profit of 42% because it spun off it's animal health division in Nov 2014. It was a one-time windfall.
- ubernostrum 11y ago
  So if drug companies stopped marketing, they'd have less money than they do now. If the only options were to have a marketing budget of eleventy quadrillion dollars or a marketing budget of zero dollars, and no other possibilities, you might have a point.
- 0x0 11y ago
  > So if drug companies stopped marketing, they'd have less money than they do now. Do you really need much marketing to sell a life saving drug? You'd think it'd kinda sell itself...?
  - WalterBright 11y ago
    Reminds me of the old joke where a CEO says: "I know I'm wasting half of the money I spend on marketing. The trouble is, I don't know which half."
  - brandonmenc 11y ago
    > Do you really need much marketing to sell a life saving drug? Didn't we just read an article here about how doctors don't/can't keep up on all the research? In that environment, it makes sense to spend money to get the drug in front of doctors (drug salespeople) and their patients (TV ads.)
    - ploxiln 11y ago
      Unless that is exactly what has overwhelmed their ability to make sense of what's available: they ignore new drugs as a protection mechanism against marketing-driven information which is less correlated with efficacy and more correlated with money.
    - elektromekatron 11y ago
      In that environment, you need better resources for doctors to keep up with research, based on clinical requirements. And that is very very far from what marketing does.
    - DanBC 11y ago
      Jesus fucking christ if you're relying on adverts for medical education of your clinicians they system is horribly broken.
  - tsotha 11y ago
    I suspect most of the marketing money goes to drugs drugs you might want but don't actually need. Allergy medications, pain pills, and pecker perkers.
- simondelacourt 11y ago
  Advertising in the Netherlands for prescription drugs is illegal in the Netherlands, and for non prescription drugs it is highly regulated. So most pharamacorps target doctors by putting up nice stands during. Here there is no need for a big marketing budget to get sales done. Not every market behaves like a regular consumer market. I think most markets are more complicated than the idea of spend $X to get $X + $Y. Especially for pharma, this has been a far more complicated relationship with the market. Profit margins might resemble other markets, but I think that when it comes to healthcare profit is a very complicated concept...
WalterBright 11y ago
> This old trope about "no new drugs" is silly. Sam Peltzman in the book "Regulation of Pharmaceutical Innovation" shows with statistics how the rate of new drug development dropped massively alongside the increase in costs of such development.
cheald 11y ago
> profit margins are insane - they are the highest in almost any business Profits kind of have to be high to attract and justify investment. Modest profit margins can't attract multiple billions of dollars which will be tied up without return for 10+ years at a time. Don't forget to include risk in your cost calculations. (re: Pfizer, you cherry-picked that number. https://www.stock-analysis-on.net/NYSE/Company/Pfizer-Inc/Ratios/Profitability https://www.stock-analysis-on.net/NYSE/Company/Pfizer-Inc/Ra... shows wildly swinging profit margins year-by-year, almost certainly driven by the decades-long drug development and regulatory clearance cycles.)

refurb 11y ago

This old trope about "no new drugs" is silly. Most drug companies spend more on marketing than R&D. I'm not sure what you're getting at. The idea with marketing is to spend $X to get $X+Y in sales, otherwise you wouldn't do any marketing. So if drug companies stopped marketing, they'd have less money than they do now. And as for "the most profitable industry". Do you know how many biotechs go under because their drug fails? How many banks does that happen to? You can't just look at the ones that succeed and say "that's typical". It's called survivorship bias. And as for Pfizer's 42% profit, you're cherrypicking. Note that in your source, most companies have a profit of 10-20%. Which is pretty decent considering the risk involved with R&D. Pfizer had a profit of 42% because it spun off it's animal health division in Nov 2014. It was a one-time windfall.

ubernostrum 11y ago
So if drug companies stopped marketing, they'd have less money than they do now. If the only options were to have a marketing budget of eleventy quadrillion dollars or a marketing budget of zero dollars, and no other possibilities, you might have a point.
0x0 11y ago
> So if drug companies stopped marketing, they'd have less money than they do now. Do you really need much marketing to sell a life saving drug? You'd think it'd kinda sell itself...?
- WalterBright 11y ago
  Reminds me of the old joke where a CEO says: "I know I'm wasting half of the money I spend on marketing. The trouble is, I don't know which half."
- brandonmenc 11y ago
  > Do you really need much marketing to sell a life saving drug? Didn't we just read an article here about how doctors don't/can't keep up on all the research? In that environment, it makes sense to spend money to get the drug in front of doctors (drug salespeople) and their patients (TV ads.)
  - ploxiln 11y ago
    Unless that is exactly what has overwhelmed their ability to make sense of what's available: they ignore new drugs as a protection mechanism against marketing-driven information which is less correlated with efficacy and more correlated with money.
  - elektromekatron 11y ago
    In that environment, you need better resources for doctors to keep up with research, based on clinical requirements. And that is very very far from what marketing does.
  - DanBC 11y ago
    Jesus fucking christ if you're relying on adverts for medical education of your clinicians they system is horribly broken.
- tsotha 11y ago
  I suspect most of the marketing money goes to drugs drugs you might want but don't actually need. Allergy medications, pain pills, and pecker perkers.
simondelacourt 11y ago
Advertising in the Netherlands for prescription drugs is illegal in the Netherlands, and for non prescription drugs it is highly regulated. So most pharamacorps target doctors by putting up nice stands during. Here there is no need for a big marketing budget to get sales done. Not every market behaves like a regular consumer market. I think most markets are more complicated than the idea of spend $X to get $X + $Y. Especially for pharma, this has been a far more complicated relationship with the market. Profit margins might resemble other markets, but I think that when it comes to healthcare profit is a very complicated concept...

WalterBright 11y ago

> This old trope about "no new drugs" is silly. Sam Peltzman in the book "Regulation of Pharmaceutical Innovation" shows with statistics how the rate of new drug development dropped massively alongside the increase in costs of such development.

cheald 11y ago

> profit margins are insane - they are the highest in almost any business Profits kind of have to be high to attract and justify investment. Modest profit margins can't attract multiple billions of dollars which will be tied up without return for 10+ years at a time. Don't forget to include risk in your cost calculations. (re: Pfizer, you cherry-picked that number. https://www.stock-analysis-on.net/NYSE/Company/Pfizer-Inc/Ratios/Profitability https://www.stock-analysis-on.net/NYSE/Company/Pfizer-Inc/Ra... shows wildly swinging profit margins year-by-year, almost certainly driven by the decades-long drug development and regulatory clearance cycles.)