4 ms·

I really think this article is spot on taking on an issue that I believe will become more and more pressing over time as baby boomers continue to retire. Howev

I really think this article is spot on taking on an issue that I believe will become more and more pressing over time as baby boomers continue to retire. However, this line felt of out of place: - "And then there's Gilead. It didn't even develop Harvoni itself; it made a business decision to pay $11 billion to buy the company that did so it could be first to market and reap the rewards, $26 billion worth. There is something obscene about that. A billion-dollar profit would have been a very respectable return on investment, but Gilead is getting much, much more than that" I mean, why is that obscene? We have seen crazier returns in [insert latest "stupid" app that made billions]. These drugs are difficult to manufacture AND to market. I am sure that if the return would have certain, then the seller would not have sold the company for that amount and would instead reaped the presumed returns. I think pharma is entitled to big returns because their business is really risky. I don't know where the answer is. Maybe it is government-driven pharma (yeah like the federal government is ever going to be good at anything), or a SpaceX for Pharma.

rayiner 10y ago
Note that a billion dollar profit would be a 3.8% return over the life of the drug (~10 years or whatever is left on the patent). You could literally get better returns with far less risk parking that money in Treasuries.
- Dylan16807 10y ago
  You're doing the math wrong. The suggestion is not a billion dollar profit on 26 billion dollars of costs. Most of the 26 billion dollars is profit. Chopping the cost tremendously would still leave a healthy profit margin. As to risk, they bought an already-proven drug. That's not the sort of thing that earns massive returns.
  - rayiner 10y ago
    I did do that math wrong, but to be fair, the article is comparing apples and kumquats. $26 billion is how much Gilead has in cash, which has little to do with Sovaldi at this point. $1 billion profit (let's say that's annual, rather than over the life of the drug) on an $11 billion purchase would be less than 10% annual ROI. That's very low for what was still a very risky investment (unapproved drug).
    - Dylan16807 10y ago
      I think in the author's ideal world, the lowered profit for Gilead would mean they aren't rushing to provide Sovaldi a multi-billion dollar profit either. So the price drops well below $11 billion, and you get a solid profit margin without gouging people that need the drug.
  - hyperliner 10y ago
    The suggestion from OP WAS in fact that a billion dollar of profits was "reasonable." Read above copy pasted quote.
    - Dylan16807 10y ago
      The billion dollar part was not the math mistake, the mistake was dividing it by 26 or 27.
Dylan16807 10y ago
> I mean, why is that obscene? We have seen crazier returns in [insert latest "stupid" app that made billions]. Some would call those app returns obscene too. I think most people would call those app returns obscene if the customers were being coerced into the purchase and the unit price was enormous.

rayiner 10y ago

Note that a billion dollar profit would be a 3.8% return over the life of the drug (~10 years or whatever is left on the patent). You could literally get better returns with far less risk parking that money in Treasuries.

Dylan16807 10y ago
You're doing the math wrong. The suggestion is not a billion dollar profit on 26 billion dollars of costs. Most of the 26 billion dollars is profit. Chopping the cost tremendously would still leave a healthy profit margin. As to risk, they bought an already-proven drug. That's not the sort of thing that earns massive returns.
- rayiner 10y ago
  I did do that math wrong, but to be fair, the article is comparing apples and kumquats. $26 billion is how much Gilead has in cash, which has little to do with Sovaldi at this point. $1 billion profit (let's say that's annual, rather than over the life of the drug) on an $11 billion purchase would be less than 10% annual ROI. That's very low for what was still a very risky investment (unapproved drug).
  - Dylan16807 10y ago
    I think in the author's ideal world, the lowered profit for Gilead would mean they aren't rushing to provide Sovaldi a multi-billion dollar profit either. So the price drops well below $11 billion, and you get a solid profit margin without gouging people that need the drug.
- hyperliner 10y ago
  The suggestion from OP WAS in fact that a billion dollar of profits was "reasonable." Read above copy pasted quote.
  - Dylan16807 10y ago
    The billion dollar part was not the math mistake, the mistake was dividing it by 26 or 27.

Dylan16807 10y ago

> I mean, why is that obscene? We have seen crazier returns in [insert latest "stupid" app that made billions]. Some would call those app returns obscene too. I think most people would call those app returns obscene if the customers were being coerced into the purchase and the unit price was enormous.