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If drug X costs 1B to research and you can sell it for a gross margin of $1 in Europe and $100 in US and you expect the lifetime total gross income to be 10.1B
by oneoff786 4y ago
If drug X costs 1B to research and you can sell it for a gross margin of $1 in Europe and $100 in US and you expect the lifetime total gross income to be 10.1B it’s a good thing to invest in.
If both countries are limited to a gross margin of $1 and you expect the lifetime gross income to be 0.2B this is now going to be a massive net loss. So you will not invest in it.
- newsclues 4y agoIf you make an addictive pay to win mobile app, and you make $1/user but have a single whale user who dumps $1000 a month into the game. If the whale suddenly stops paying, you can continue to profit from regular customers you just don’t make the obscene profit from before. Can corporations continue to survive with less profit? I think some individuals have to learn to live with less income, so I’m sure a big pharmaceutical company can figure it out, I’ve had to cut out most meat from my diet in lean times, I’m sure pharmaceutical executives can do something similar.
- oneoff786 4y agoNo, you’ve entirely missed the point. There is a large, up front research cost to drugs (and video games). If you have no whales, you might not expect the game to ever achieve enough gross revenue (revenue minus variable costs, sort of) to offset the research costs. Given you already have the drug, sure, it makes sense to keep selling it. But if you try to research more drugs and make more games with no whales, you will quickly go out of business. The video game analogy is apt. These kinds of video games are only possible because of whales. If whales could not exist due to regulations similar to drugs, they would not be developed / researched