3 ms·

That year, the company spent $17.8 billion on stock buybacks, dividends, and executive compensation, while the company spent just $14.6 billion on R&D, the repo

by refurb 3y ago

That year, the company spent $17.8 billion on stock buybacks, dividends, and executive compensation, while the company spent just $14.6 billion on R&D, the report states. "In other words, the company spent $3.2 billion more enriching executives and stockholders than finding new cures," it concludes. This is such a bizarre criticism. Note they include executive compensation, despite it being $26M out of the $14.6B (0.15%). And "spending" on dividends? You mean "returning money to shareholders". How do they think businesses work? And since I have a 401k invested in index funds, I'm a shareholder. So the criticism of "spending on shareholders" they actually mean "vast swaths of Americans whose retirement and pensions are invested in the stock market".

nashashmi 3y ago
Further considering how money is getting devalued, investing the surplus money into stock reserves is the correct investment.
consp 3y ago
> returning money to shareholders There is nothing to return. Handing out is what it is. > And since I have a 401k invested in index funds, I'm a shareholder. So the criticism of "spending on shareholders" they actually mean "vast swaths of Americans whose retirement and pensions are invested in the stock market This is a common repeated fallacy. Nice for you to profit but this is no whole gain for society.
- throwawayqqq11 3y ago
  Even better, the more ground level and more risky research is often funded publicly, only to be bought or go private, once a product could emerge. Big pharma is hawking over public research.
  - BenFranklin100 3y ago
    This is an oft-repeated sound bite by politicians looking to score cheap points, but it isn’t true. https://www.science.org/content/blog-post/rep-ocasio-cortez-and-where-drugs-come https://www.science.org/content/blog-post/rep-ocasio-cortez-...
    - throwawayqqq11 3y ago
      I dont buy it. Your linked blog post is about Derek Lowe gathering anecdotes, mostly. His linked article (a better one) https://www.science.org/content/blog-post/where-drugs-come-numbers https://www.science.org/content/blog-post/where-drugs-come-n... is biased, because it only looks at approved drugs. He himself turns slightly to the R&D side and almost gets it. > And now to innovation - 118 of the drugs during this period were considered to have scientific novelty (46%), and of those: > 44% were from pharmaceutical companies. > 25% were from biotech companies, and > 31% were from universities (transferred to either biotech or pharma). > The university-derived drugs clearly outperform in this category. What this also means is that 65% of the pharma-derived drugs get classed as "not innovative" To be fair, i dont think you can convince me, that the pharma industry has no incentive to externalize risky or less profitable research and would never do it. I have one anecdote for you too, hitting that exact spot: anti-biotics research. Because even though it has good prospect for profit, it is too risky research (kind of diminishing returns of R&D in that area). https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7872909/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7872909/
      - refurb 3y ago
        Your logic doesn’t hold up. You’re forgetting that this data is where the drugs come from not who developed them. 100% of approved drugs were developed by pharma. And that’s the most expensive part. Spend $5M on early research is great, but all the academics out-license because the government isn’t going to bankroll the $100M-$500M cost of actually shepherding it through FDA approval. Hence most of the financial risk is borne by the pharma companies. And you’re right, this doesn’t include the billions spent by pharma on failed projects. It’s a great deal for society. Let private money fund development. Let them pay for the 90% failure rate. And in exchange, they get ~10 year of patent protection, so the winners pay out a 10-100x return (to make it worth while investing at all). Then after the patent runs out, the price falls 90%+ and society gets to pay pennies on the dollar for innovation.
  - refurb 3y ago
    This is false. All you have to do is look at the R&D spending of big pharma versus government. It dwarfs the R&D spent by the NSF, NIH, etc.
- BenFranklin100 3y ago
  The ‘whole gain’ for society is the medications that come out of investors putting money into these companies, instead of, say, Facebook. In 10-15 years, every new medication released today, will be off patent — and with insurance helping with payments taking into consideration — essentially free. Mind you, we are also talking about diseases for which no therapies exist today, and therefore the cost is effectively infinite in 2024. Another point this story glosses over is that the $14.6B spent on R&D, represents nearly 1/3 of the entire National Institutes for Health $47B 2023 budget. And this is by a single company.
insane_dreamer 3y ago
> "returning money to shareholders" unless you're just getting your money back, it's not "returning" money to shareholders; it's "paying out profits to shareholders" since Pharma has exclusive control over products that citizens must have or they will get sick and/or die, they are not the same as your average company. so the question is -- what's more important, that shareholders get their dividends or that the money is either spent on 1) developing more drugs to combat more diseases (or improve the drugs we have, or 2) lowering the cost of drugs so people who are sick can actually get them without going bust. remember that unlike almost any other industry, Pharma is allowed a __monopoly__ on drugs for a long time, and because we can't import drugs from outside the US (try buying from Canada), they control prices almost perpetually People complain about Apple but all least you can get a Google phone if you want one. But if you need a drug that's monopolized by one company, they can set whatever price they want and you have no recourse (unless you do move to Canada).
- gruez 3y ago
  >remember that unlike almost any other industry, Pharma is allowed a __monopoly__ on drugs for a long time, and because we can't import drugs from outside the US (try buying from Canada), they control prices almost perpetually It's not a monopoly per se. Anyone can import drugs as long as they meet the relevant regulations.
  - insane_dreamer 3y ago
    > as long as they meet the relevant regulations. mighty big conditional there. Florida is the first state to get approval to do so and that only happened last month. It might break but yeah so far it has been a monopoly.

by refurb 3y ago

nashashmi 3y ago

Further considering how money is getting devalued, investing the surplus money into stock reserves is the correct investment.

consp 3y ago

> returning money to shareholders There is nothing to return. Handing out is what it is. > And since I have a 401k invested in index funds, I'm a shareholder. So the criticism of "spending on shareholders" they actually mean "vast swaths of Americans whose retirement and pensions are invested in the stock market This is a common repeated fallacy. Nice for you to profit but this is no whole gain for society.

throwawayqqq11 3y ago
Even better, the more ground level and more risky research is often funded publicly, only to be bought or go private, once a product could emerge. Big pharma is hawking over public research.
- BenFranklin100 3y ago
  This is an oft-repeated sound bite by politicians looking to score cheap points, but it isn’t true. https://www.science.org/content/blog-post/rep-ocasio-cortez-and-where-drugs-come https://www.science.org/content/blog-post/rep-ocasio-cortez-...
  - throwawayqqq11 3y ago
    I dont buy it. Your linked blog post is about Derek Lowe gathering anecdotes, mostly. His linked article (a better one) https://www.science.org/content/blog-post/where-drugs-come-numbers https://www.science.org/content/blog-post/where-drugs-come-n... is biased, because it only looks at approved drugs. He himself turns slightly to the R&D side and almost gets it. > And now to innovation - 118 of the drugs during this period were considered to have scientific novelty (46%), and of those: > 44% were from pharmaceutical companies. > 25% were from biotech companies, and > 31% were from universities (transferred to either biotech or pharma). > The university-derived drugs clearly outperform in this category. What this also means is that 65% of the pharma-derived drugs get classed as "not innovative" To be fair, i dont think you can convince me, that the pharma industry has no incentive to externalize risky or less profitable research and would never do it. I have one anecdote for you too, hitting that exact spot: anti-biotics research. Because even though it has good prospect for profit, it is too risky research (kind of diminishing returns of R&D in that area). https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7872909/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7872909/
    - refurb 3y ago
      Your logic doesn’t hold up. You’re forgetting that this data is where the drugs come from not who developed them. 100% of approved drugs were developed by pharma. And that’s the most expensive part. Spend $5M on early research is great, but all the academics out-license because the government isn’t going to bankroll the $100M-$500M cost of actually shepherding it through FDA approval. Hence most of the financial risk is borne by the pharma companies. And you’re right, this doesn’t include the billions spent by pharma on failed projects. It’s a great deal for society. Let private money fund development. Let them pay for the 90% failure rate. And in exchange, they get ~10 year of patent protection, so the winners pay out a 10-100x return (to make it worth while investing at all). Then after the patent runs out, the price falls 90%+ and society gets to pay pennies on the dollar for innovation.
- refurb 3y ago
  This is false. All you have to do is look at the R&D spending of big pharma versus government. It dwarfs the R&D spent by the NSF, NIH, etc.
BenFranklin100 3y ago
The ‘whole gain’ for society is the medications that come out of investors putting money into these companies, instead of, say, Facebook. In 10-15 years, every new medication released today, will be off patent — and with insurance helping with payments taking into consideration — essentially free. Mind you, we are also talking about diseases for which no therapies exist today, and therefore the cost is effectively infinite in 2024. Another point this story glosses over is that the $14.6B spent on R&D, represents nearly 1/3 of the entire National Institutes for Health $47B 2023 budget. And this is by a single company.

insane_dreamer 3y ago

> "returning money to shareholders" unless you're just getting your money back, it's not "returning" money to shareholders; it's "paying out profits to shareholders" since Pharma has exclusive control over products that citizens must have or they will get sick and/or die, they are not the same as your average company. so the question is -- what's more important, that shareholders get their dividends or that the money is either spent on 1) developing more drugs to combat more diseases (or improve the drugs we have, or 2) lowering the cost of drugs so people who are sick can actually get them without going bust. remember that unlike almost any other industry, Pharma is allowed a __monopoly__ on drugs for a long time, and because we can't import drugs from outside the US (try buying from Canada), they control prices almost perpetually People complain about Apple but all least you can get a Google phone if you want one. But if you need a drug that's monopolized by one company, they can set whatever price they want and you have no recourse (unless you do move to Canada).

gruez 3y ago
>remember that unlike almost any other industry, Pharma is allowed a __monopoly__ on drugs for a long time, and because we can't import drugs from outside the US (try buying from Canada), they control prices almost perpetually It's not a monopoly per se. Anyone can import drugs as long as they meet the relevant regulations.
- insane_dreamer 3y ago
  > as long as they meet the relevant regulations. mighty big conditional there. Florida is the first state to get approval to do so and that only happened last month. It might break but yeah so far it has been a monopoly.