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“Drug companies rip off consumers” That is an extremely glib view. There are “some” drug companies that rip off people. The problem with pricing in the Rx worl

“Drug companies rip off consumers” That is an extremely glib view. There are “some” drug companies that rip off people. The problem with pricing in the Rx world is the high cost and unpredictable nature of discovering new drugs. Profit margin of tech companies is twice that of Rx companies. Would you say that tech companies are ripping people off? http://www.businessinsider.com/sector-profit-margins-sp-500-2012-8 http://www.businessinsider.com/sector-profit-margins-sp-500-...

bkmartin 9y ago
The chart you reference shows that they are virtually the same... All of Health vs All of Tech - yes, you are right. Tech is about double. But Pharma, Biotech, Life Sciences show better returns over Tech as a whole and virtually equivalent Software & Services return. I would argue that there are definitely players in the Tech space that are raking some very hefty profits, but are in highly competitive markets that could see that erode into losses very quickly... I do not think we are quite in the realm of price gouging and the lower barriers to entry in most of tech keeps things from swinging too far off the charts.
- vibrio 9y ago
  One should consider any survivorship bias in thinking about that. Also consider that a series A in biopharma is commonly well above above $30MM, and that doesn't generally even come close to funding proof-of-concpet clinical studies. That combined with any survivorship bias complicates the economic interpretations of cross industry profit margins.
  - bkmartin 9y ago
    That doesn't really apply here does it? My comment is only in reference to S&P500 companies, that the OP to my comment referenced.
posterboy 9y ago
Strawman fallacy! Please stay on-topic! Well, Facebook is collecting data and selling it to pharma companies for probably more than advertising, I suppose. Yes, they are part of the problem. I'm not generalizing who's at fault, but there is a problem.
deleted 9y ago
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bkmartin 9y ago

The chart you reference shows that they are virtually the same... All of Health vs All of Tech - yes, you are right. Tech is about double. But Pharma, Biotech, Life Sciences show better returns over Tech as a whole and virtually equivalent Software & Services return. I would argue that there are definitely players in the Tech space that are raking some very hefty profits, but are in highly competitive markets that could see that erode into losses very quickly... I do not think we are quite in the realm of price gouging and the lower barriers to entry in most of tech keeps things from swinging too far off the charts.

vibrio 9y ago
One should consider any survivorship bias in thinking about that. Also consider that a series A in biopharma is commonly well above above $30MM, and that doesn't generally even come close to funding proof-of-concpet clinical studies. That combined with any survivorship bias complicates the economic interpretations of cross industry profit margins.
- bkmartin 9y ago
  That doesn't really apply here does it? My comment is only in reference to S&P500 companies, that the OP to my comment referenced.

posterboy 9y ago

Strawman fallacy! Please stay on-topic! Well, Facebook is collecting data and selling it to pharma companies for probably more than advertising, I suppose. Yes, they are part of the problem. I'm not generalizing who's at fault, but there is a problem.

deleted 9y ago

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