12 ms·

Proportionately to their revenue, pharma doesn't spend that much on R&D: https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are

Proportionately to their revenue, pharma doesn't spend that much on R&D: https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... And that's just compared to advertising - throw in other overhead, and separate R&D into genuinely new drugs vs. generics and flavoured aspirin, and the numbers are even worse. Of course it's hard to get such comprehensive financial data, but that's just one of the advantages of private healthcare - hiding data to hide how much you're being exploited.

refurb 10y ago
Drug companies spend the most on R&D out of any industry. The average is almost 20% of revenue. That means if you buy a drug for $1000, $200 of that goes back into R&D. And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products.
- DarkKomunalec 10y ago
  > And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products. That's advertising. You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture.
  - tclAmockingbird 10y ago
    > > And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products. > That's advertising. It's also keeping physicians up to date on the current science, applicability, and best practices of their products. I think it's a good thing for sales reps and MSLs to inform or remind physicians that there are alternatives to writing a script for Epipens, for example. > You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture. Many drugs are cheap to make, but that neglects the astronomical development and regulatory costs.
    - galdosdi 10y ago
      FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing. You can't expect to get unbiased, quality advice from someone with such a strong incentive. The right way for doctors to stay up to date is for doctors to stay up to date! They need to read a damn book or journal article once in a while and takes responsibility for their own professional development. If doctors aren't doing that, regulators need to suspend their licenses.
      - tclAmockingbird 10y ago
        > FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing. MSLs have advanced degrees in medicine or biomedical research. It's preferred that the traditional sales reps now have bachelor's degrees in the sciences and it is expected that, within the narrow scope of their product's science, they be well-informed regardless of prior academic background. It's preferred because they are more effective reps. > You can't expect to get unbiased, quality advice from someone with such a strong incentive. The right way for doctors to stay up to date is for doctors to stay up to date! They need to read a damn book or journal article once in a while and takes responsibility for their own professional development. If doctors aren't doing that, regulators need to suspend their licenses. Continuing medical education is a requirement to maintain licensure. I don't think I get your point here.
        rhizome 10y ago
        Not everyone here is in the industry, what's an MSL?
        tclAmockingbird 10y ago
  - xadhominemx 10y ago
    you're speaking very authoritatively for someone who apparently does not know the difference between sales, marketing, and advertising and also does not know how to pull basic financial information of publicly-traded companies
    - DarkKomunalec 10y ago
      What a great opportunity for you to pull this so easily available and understandable information, and destroy my entire argument by showing how efficiently pharma allocates revenue to important drug research, and how little is wasted on marketing, sales, generics, and other stuff!
  - brandonmenc 10y ago
    > That's advertising. Anecdotally, a friend of mine was doing post-doctoral work researching and developing cancer drugs. He now works on a pharmaceutical sales team as a scientific liaison. "Advertising" a drug involves a lot more than running TV commercials - it also includes former scientists making the current research digestible for doctors who don't have the time or specialized knowledge to do that in between seeing patients. The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous.
    - Retric 10y ago
      There are only ~50 new drugs a year, and many of those are highly specialized. So, it's really not hard to keep up with new drugs. The hard part is actually staying fresh on all the existing knowledge that you don't use regularly and some changes to best practices.
      - refurb 10y ago
        You realize that new data comes out on drugs constantly? Even drugs launched 10 years ago. Just take a look at all the medical journals. It's not a one-and-done thing with learning about drugs.
        Retric 10y ago
        Yes, but again it's not about "keeping up on the latest pharmaceuticals" that's small chunk of time. The changing landscape of existing drugs that have been out for 2+ years is much larger than the number of 'new' drugs. Look into AIDS medications for example and pills are often a mix of 2+ existing drugs that work well together. And again, GP's rarely have to worry about the new Cancer drugs etc.
    - dikdik 10y ago
      >The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous. That's part of the doctor's job, if they can't keep up with new medical/pharma literature then they need to find a different job. Further, most doctors know taking a ton of info from a pharma rep is just asking to be misinformed. A lot of pharma sales reps have no science background and many lie about approved populations and other aspects of a drug (just see the many, many lawsuits out there).
  - deleted 10y ago
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- deleted 10y ago
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- triangleman 10y ago
  Someone had just posted a really useful post that was deleted about 15 minutes later. Here is the post copy/pasted in its entirety: EDIT: Wall of Text warning. >The average is almost 20% of revenue. This isn't exactly true. In fact the pharma industry lies so prodigously about it's own costs that it's almost impossible to know what they actually are spending on R&D. We can trace back the source of these numbers to various PhRMA reports like this one: http://www.phrma.org/sites/default/files/pdf/2015_phrma_prof.. http://www.phrma.org/sites/default/files/pdf/2015_phrma_prof.... Which gives us this: PERCENTAGE OF SALES THAT WENT TO R&D IN 2013 Domestic R&D as a percentage of domestic sales = 23.4% Total R&D as a percentage of total sales = 17.9% which basically supports your point. Their methodology though is quite interesting. >In 1991, Joseph DiMasi and colleagues from the Tufts Center for the Study of Drug Development published a widely quoted, comprehensive study of drug development costs. Using project data from confidential surveys, the study estimated cash outlays of around $169M to successfully bring a drug to market during a period beginning in the 1970s. PhRMA relies on this research as the foundation for their statements about the cost of drug development. However, PhRMA uses different assumptions about a "hidden" expense called "opportunity cost" that boosts this estimate to the $500 million mark. >PhRMA's assumptions begin with DiMasi's original estimate of R&D outlays with opportunity cost set at 9% and a 12-year development period. A review of the Tufts study performed by the US Office of Technology Assessment (OTA) subsequently calculated opportunity cost at a higher rate, which pushed the estimate towards $360 million. According to Public Citizen, this figure, when adjusted for inflation and rounded up, became PhRMA's $500 million. >But Public Citizen says the OTA report also offers an alternative analysis of development costs. R&D expenses are tax deductible, but DiMasi's 1991 figures didn't consider the discount this offers. If the original Tufts estimate is reduced by 34% in tax savings and opportunity cost is subtracted, Public Citizen says the actual cash outlay for bringing a new drug to market during the seventies and eighties was actually closer to $65 million. http://www.thebody.com/content/art13514.html http://www.thebody.com/content/art13514.html Furthermore: >Notably, as in the Center's previous estimates, nearly half the cost of drug development was accounted for not by research expenditures but by the cost of capital. The analysts justified that assumption by noting that during the years a company spends developing a new product, it incurs opportunity costs by not using those dollars for other purposes. That argument is plausible, and such calculations can be an appropriate component of such analyses. However, nearly half the total cost of developing a new drug ($1.2 billion) was ascribed to this cost of capital, with only $1.4 billion attributed to funds actually spent on research. These capital costs were assessed at 10.6% per year, compounded — despite the fact that bonds issued by drug companies often pay only 1 to 5%. >The Tufts calculations also explicitly do not take into account the large public subsidies provided to pharmaceutical companies in the form of research-and-development tax credits or substantial payments received from the federal government for other research activities, such as testing their products in children. Perhaps most important, because the calculations are based only on products that the companies described as “self-originated,” the $2.6 billion figure does not consider drug-development costs borne by the public for the large number of medications that are based on external research that elucidated the disease mechanisms they address. One recent analysis showed that more than half of the most transformative drugs developed in recent decades had their origins in publicly funded research at nonprofit, university-affiliated centers.4 http://www.nejm.org/doi/full/10.1056/NEJMp1500848#t=article http://www.nejm.org/doi/full/10.1056/NEJMp1500848#t=article Now this is obviously just absurd. These R&D numbers are totally meaningless! They've been biased at literally every step of the process to be shown as larger than they really are.
rayiner 10y ago
Let's take the middle two from each row: Pfizer and AstraZeneca. In 2013, Pfizer spent 13% of revenue on R&D, while AstraZeneca spent 17%. Google spent 12.9%, Intel spent 20.1%, and Microsoft spent 13.5%. Apple typically spends only 3-4% of revenues on R&D, but it's an outlier in the tech industry.

refurb 10y ago

Drug companies spend the most on R&D out of any industry. The average is almost 20% of revenue. That means if you buy a drug for $1000, $200 of that goes back into R&D. And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products.

DarkKomunalec 10y ago
> And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products. That's advertising. You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture.
- tclAmockingbird 10y ago
  > > And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products. > That's advertising. It's also keeping physicians up to date on the current science, applicability, and best practices of their products. I think it's a good thing for sales reps and MSLs to inform or remind physicians that there are alternatives to writing a script for Epipens, for example. > You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture. Many drugs are cheap to make, but that neglects the astronomical development and regulatory costs.
  - galdosdi 10y ago
    FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing. You can't expect to get unbiased, quality advice from someone with such a strong incentive. The right way for doctors to stay up to date is for doctors to stay up to date! They need to read a damn book or journal article once in a while and takes responsibility for their own professional development. If doctors aren't doing that, regulators need to suspend their licenses.
    - tclAmockingbird 10y ago
      > FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing. MSLs have advanced degrees in medicine or biomedical research. It's preferred that the traditional sales reps now have bachelor's degrees in the sciences and it is expected that, within the narrow scope of their product's science, they be well-informed regardless of prior academic background. It's preferred because they are more effective reps. > You can't expect to get unbiased, quality advice from someone with such a strong incentive. The right way for doctors to stay up to date is for doctors to stay up to date! They need to read a damn book or journal article once in a while and takes responsibility for their own professional development. If doctors aren't doing that, regulators need to suspend their licenses. Continuing medical education is a requirement to maintain licensure. I don't think I get your point here.
      - rhizome 10y ago
        Not everyone here is in the industry, what's an MSL?
        tclAmockingbird 10y ago
- xadhominemx 10y ago
  you're speaking very authoritatively for someone who apparently does not know the difference between sales, marketing, and advertising and also does not know how to pull basic financial information of publicly-traded companies
  - DarkKomunalec 10y ago
    What a great opportunity for you to pull this so easily available and understandable information, and destroy my entire argument by showing how efficiently pharma allocates revenue to important drug research, and how little is wasted on marketing, sales, generics, and other stuff!
- brandonmenc 10y ago
  > That's advertising. Anecdotally, a friend of mine was doing post-doctoral work researching and developing cancer drugs. He now works on a pharmaceutical sales team as a scientific liaison. "Advertising" a drug involves a lot more than running TV commercials - it also includes former scientists making the current research digestible for doctors who don't have the time or specialized knowledge to do that in between seeing patients. The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous.
  - Retric 10y ago
    There are only ~50 new drugs a year, and many of those are highly specialized. So, it's really not hard to keep up with new drugs. The hard part is actually staying fresh on all the existing knowledge that you don't use regularly and some changes to best practices.
    - refurb 10y ago
      You realize that new data comes out on drugs constantly? Even drugs launched 10 years ago. Just take a look at all the medical journals. It's not a one-and-done thing with learning about drugs.
      - Retric 10y ago
        Yes, but again it's not about "keeping up on the latest pharmaceuticals" that's small chunk of time. The changing landscape of existing drugs that have been out for 2+ years is much larger than the number of 'new' drugs. Look into AIDS medications for example and pills are often a mix of 2+ existing drugs that work well together. And again, GP's rarely have to worry about the new Cancer drugs etc.
  - dikdik 10y ago
    >The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous. That's part of the doctor's job, if they can't keep up with new medical/pharma literature then they need to find a different job. Further, most doctors know taking a ton of info from a pharma rep is just asking to be misinformed. A lot of pharma sales reps have no science background and many lie about approved populations and other aspects of a drug (just see the many, many lawsuits out there).
- deleted 10y ago
  [deleted]
deleted 10y ago
[deleted]
triangleman 10y ago
Someone had just posted a really useful post that was deleted about 15 minutes later. Here is the post copy/pasted in its entirety: EDIT: Wall of Text warning. >The average is almost 20% of revenue. This isn't exactly true. In fact the pharma industry lies so prodigously about it's own costs that it's almost impossible to know what they actually are spending on R&D. We can trace back the source of these numbers to various PhRMA reports like this one: http://www.phrma.org/sites/default/files/pdf/2015_phrma_prof.. http://www.phrma.org/sites/default/files/pdf/2015_phrma_prof.... Which gives us this: PERCENTAGE OF SALES THAT WENT TO R&D IN 2013 Domestic R&D as a percentage of domestic sales = 23.4% Total R&D as a percentage of total sales = 17.9% which basically supports your point. Their methodology though is quite interesting. >In 1991, Joseph DiMasi and colleagues from the Tufts Center for the Study of Drug Development published a widely quoted, comprehensive study of drug development costs. Using project data from confidential surveys, the study estimated cash outlays of around $169M to successfully bring a drug to market during a period beginning in the 1970s. PhRMA relies on this research as the foundation for their statements about the cost of drug development. However, PhRMA uses different assumptions about a "hidden" expense called "opportunity cost" that boosts this estimate to the $500 million mark. >PhRMA's assumptions begin with DiMasi's original estimate of R&D outlays with opportunity cost set at 9% and a 12-year development period. A review of the Tufts study performed by the US Office of Technology Assessment (OTA) subsequently calculated opportunity cost at a higher rate, which pushed the estimate towards $360 million. According to Public Citizen, this figure, when adjusted for inflation and rounded up, became PhRMA's $500 million. >But Public Citizen says the OTA report also offers an alternative analysis of development costs. R&D expenses are tax deductible, but DiMasi's 1991 figures didn't consider the discount this offers. If the original Tufts estimate is reduced by 34% in tax savings and opportunity cost is subtracted, Public Citizen says the actual cash outlay for bringing a new drug to market during the seventies and eighties was actually closer to $65 million. http://www.thebody.com/content/art13514.html http://www.thebody.com/content/art13514.html Furthermore: >Notably, as in the Center's previous estimates, nearly half the cost of drug development was accounted for not by research expenditures but by the cost of capital. The analysts justified that assumption by noting that during the years a company spends developing a new product, it incurs opportunity costs by not using those dollars for other purposes. That argument is plausible, and such calculations can be an appropriate component of such analyses. However, nearly half the total cost of developing a new drug ($1.2 billion) was ascribed to this cost of capital, with only $1.4 billion attributed to funds actually spent on research. These capital costs were assessed at 10.6% per year, compounded — despite the fact that bonds issued by drug companies often pay only 1 to 5%. >The Tufts calculations also explicitly do not take into account the large public subsidies provided to pharmaceutical companies in the form of research-and-development tax credits or substantial payments received from the federal government for other research activities, such as testing their products in children. Perhaps most important, because the calculations are based only on products that the companies described as “self-originated,” the $2.6 billion figure does not consider drug-development costs borne by the public for the large number of medications that are based on external research that elucidated the disease mechanisms they address. One recent analysis showed that more than half of the most transformative drugs developed in recent decades had their origins in publicly funded research at nonprofit, university-affiliated centers.4 http://www.nejm.org/doi/full/10.1056/NEJMp1500848#t=article http://www.nejm.org/doi/full/10.1056/NEJMp1500848#t=article Now this is obviously just absurd. These R&D numbers are totally meaningless! They've been biased at literally every step of the process to be shown as larger than they really are.

rayiner 10y ago

Let's take the middle two from each row: Pfizer and AstraZeneca. In 2013, Pfizer spent 13% of revenue on R&D, while AstraZeneca spent 17%. Google spent 12.9%, Intel spent 20.1%, and Microsoft spent 13.5%. Apple typically spends only 3-4% of revenues on R&D, but it's an outlier in the tech industry.