3 ms·

It's important to remember that the largest expense item for big pharma is not R&D but marketing & administrative.

by qaq 10y ago

specialist 10y ago
I support moving R&D and early stage trials back to the government. Then pharmas place their bets by licensing the drugs to manufacture and bring to market. The earlier they license, the greater the risk, the lower the cost.
- refurb 10y ago
  Back to the government? What makes you think the government was ever doing it to begin with? And what problem would that solve? Right now a lot of drugs are invented by small biotechs then purchased by the big pharma companies.
zaroth 10y ago
Here's the actual data: http://endpts.com/which-big-biopharma-companies-put-rd-as-their-top-priority/ http://endpts.com/which-big-biopharma-companies-put-rd-as-th... SG&A is perhaps a broader category than most people understand it to be. Also, I assume that "R&D" does not include depreciation on all the assets necessary to actually perform the R&D. So I think it's an interesting metric but perhaps not incredibly meaningful. Most companies spend a lot less on R&D as a percentage of revenue than pharma. Here's a similar chart for the big tech companies: https://www.theatlas.com/charts/N1Gs8E4v https://www.theatlas.com/charts/N1Gs8E4v
refurb 10y ago
You do realize that S&GA is a catch all for the general expenses for running a company right? Why would you be surprised it's such a high percent? Also, you may want to do a side-by-side comparison of which industry spends the most on R&D. It's ~20% in pharma which dwarfs most other industries.
- qaq 10y ago
  There are articles that actually break out Sales & Marketing budgets (2013 numbers I am excluding J&J since they have a lot of consumer products) "Next in line is Pfizer ($PFE), long known for its marketing muscle. The drugmaker plowed $11.4 billion into marketing in 2013, $4.8 billion more than it spent on R&D--a difference of 72%. AstraZeneca ($AZN) is close behind with a 70% difference. The U.K.-based company put $7.3 billion toward marketing last year, and $4.3 billion into R&D. AstraZeneca has been pumping up marketing behind products such as its blood-thinner Brilinta as it preps for the onslaught of Nexium copycats. The next 5 range from a 47% difference in favor of R&D on the high end--Novartis ($NVS), with $14.6 billion in marketing spending--to 27% on the low end. The latter is Merck ($MRK), with $9.5 billion allocated to marketing and $7.5 billion to R&D. Then there's Eli Lilly ($LLY), with a mere $200 million premium to the marketing side. Its marketing spending clocked in at $5.7 billion, compared with $5.5 billion for R&D. That's a difference of just 7%.""

It's important to remember that the largest expense item for big pharma is not R&D but marketing & administrative.

by qaq 10y ago

It's important to remember that the largest expense item for big pharma is not R&D but marketing & administrative.

I support moving R&D and early stage trials back to the government. Then pharmas place their bets by licensing the drugs to manufacture and bring to market. The earlier they license, the greater the risk, the lower the cost.

refurb 10y ago
Back to the government? What makes you think the government was ever doing it to begin with? And what problem would that solve? Right now a lot of drugs are invented by small biotechs then purchased by the big pharma companies.

zaroth 10y ago

Here's the actual data: http://endpts.com/which-big-biopharma-companies-put-rd-as-their-top-priority/ http://endpts.com/which-big-biopharma-companies-put-rd-as-th... SG&A is perhaps a broader category than most people understand it to be. Also, I assume that "R&D" does not include depreciation on all the assets necessary to actually perform the R&D. So I think it's an interesting metric but perhaps not incredibly meaningful. Most companies spend a lot less on R&D as a percentage of revenue than pharma. Here's a similar chart for the big tech companies: https://www.theatlas.com/charts/N1Gs8E4v https://www.theatlas.com/charts/N1Gs8E4v

refurb 10y ago

You do realize that S&GA is a catch all for the general expenses for running a company right? Why would you be surprised it's such a high percent? Also, you may want to do a side-by-side comparison of which industry spends the most on R&D. It's ~20% in pharma which dwarfs most other industries.

qaq 10y ago
There are articles that actually break out Sales & Marketing budgets (2013 numbers I am excluding J&J since they have a lot of consumer products) "Next in line is Pfizer ($PFE), long known for its marketing muscle. The drugmaker plowed $11.4 billion into marketing in 2013, $4.8 billion more than it spent on R&D--a difference of 72%. AstraZeneca ($AZN) is close behind with a 70% difference. The U.K.-based company put $7.3 billion toward marketing last year, and $4.3 billion into R&D. AstraZeneca has been pumping up marketing behind products such as its blood-thinner Brilinta as it preps for the onslaught of Nexium copycats. The next 5 range from a 47% difference in favor of R&D on the high end--Novartis ($NVS), with $14.6 billion in marketing spending--to 27% on the low end. The latter is Merck ($MRK), with $9.5 billion allocated to marketing and $7.5 billion to R&D. Then there's Eli Lilly ($LLY), with a mere $200 million premium to the marketing side. Its marketing spending clocked in at $5.7 billion, compared with $5.5 billion for R&D. That's a difference of just 7%.""