3 ms·
Also if the risk is so high why are drug companies so profitable over the long term? Pharma firms are head and shoulders the most profitable firms in the S&P 50
by cmdrfred 10y ago
Also if the risk is so high why are drug companies so profitable over the long term? Pharma firms are head and shoulders the most profitable firms in the S&P 500 every single year.
- akiselev 10y agoHigh risk, high reward. Why would anyone take a higher risk for a lower reward? Pharmaceutical companies in the S&P500 are so profitable because of barriers to entry, massive capital requirements, and a whole biotechnology industry feeding them acquisitions. Biotech startups going under with zero revenue after raising hundreds of millions of dollars from VCs and institutional investors is a regular occurrence. Since the brunt of the pure research is publicly funded and other investors chasing ROI take care of much of the R&D risk, big pharma companies benefit a lot from other people's money just for providing exit opportunities for smaller companies.
- deleted 10y ago[deleted]