3 ms·

A huge part of the expense of Pharma is compliance. A simple example of a PC connected some lab equipment. The PC and the equipment have to be validated which m

A huge part of the expense of Pharma is compliance. A simple example of a PC connected some lab equipment. The PC and the equipment have to be validated which means that every step used to install the PC, equipment and software has be in an approved procedure that used to deploy them. Any deviation from that procedure will require a exception reports that will have their own approval process. Once in use every action is performed has a procedure. Any deviation from that procedure will result in an investigation that can be reportable to the FDA etc. Every task done on the system will have a log that has to be manually filled out by an analyst or an admin. There are regular system and user access reviews that are reviewed and approved. Once the system is no longer in use a formal decommissioning has to occur. Date may have to be kept for 25, 40 or even 100 years. Now picture a lab with 100s of systems.

ta988 3y ago
And yet even with that, executive pays and dividends (meaning profits over development) are higher than R&D cost. plus the cost of compliance is still less than human cost in R&D.
araes 3y ago
Are there any public numbers available on how much of the drug companies expenses is compliance related? Is that bookkept with "cost-of-doing-business" or some other line item? Current examples I have found: [1] Eli Lilly, 2022 Annual Report: https://investor.lilly.com/static-files/2f9b7bb1-f955-448d-baa2-c4343d39ee62 https://investor.lilly.com/static-files/2f9b7bb1-f955-448d-b... Significant mentions of "compliance" (most are legal issues). However, a decent number of warning statements about how government compliance will require significant effort. No actual numbers I could find. Main Finanacial is pg 57. [2] Merck, 2022 Annual Report: https://www.emdgroup.com/en/annualreport/2022/_assets/downloads/entire-emd-ar22.pdf https://www.emdgroup.com/en/annualreport/2022/_assets/downlo... 200+ mentions of "compliance" (most are legal issues, it's a lot to check) Pg 148 has "number of self reported compliance violations. Most are fraud or "against company values". 79 reported with 28 confirmed. Main financials start pg 230. There was some about "compliance with audits", yet nothing I could find that was a line item for "government process compliance" or something similar. [3] Johnson & Johnson, 2022 Annual Report: https://www.investor.jnj.com/files/doc_financials/2022/ar/2022-annual-report.pdf https://www.investor.jnj.com/files/doc_financials/2022/ar/20... Significant mentions of "compliance" (most are legal issues, J&J has a "bunch" of lawsuits in Canada vs generics). Could not find a direct reference to cost of government compliance, although I did read a part that implied it seemed to be rolled into R&D somewhere. Financial Statement is at pg 54, although the $ numbers start quite a bit earlier. [4] Bristol Myers Squibb, 2022 Annual Report: https://annual-report.bms.com/assets/bms-ar/documents/2022-bms-annual-report.pdf https://annual-report.bms.com/assets/bms-ar/documents/2022-b... Notably, has a neat list of the main compounds currently under investigation with various groups, and "products in pipeline developments" (basically drug status updates). Only 2 mentions of compliance, both are officers. Financials are pg 40 in the pdf. Also, there is something wrong with their PDF format, because search is very obviously broken (at least on Firefox). So there might be something hiding in there that's just not being searched correctly. Anyway, best effort for a half hour of avoiding working on anything, and did not find a number source.
- mywacaday 3y ago
  Great work, I'll try and take a look at some of the reports over the weekend, you've piqued my interest to dig further

ta988 3y ago

And yet even with that, executive pays and dividends (meaning profits over development) are higher than R&D cost. plus the cost of compliance is still less than human cost in R&D.

araes 3y ago

Are there any public numbers available on how much of the drug companies expenses is compliance related? Is that bookkept with "cost-of-doing-business" or some other line item? Current examples I have found: [1] Eli Lilly, 2022 Annual Report: https://investor.lilly.com/static-files/2f9b7bb1-f955-448d-baa2-c4343d39ee62 https://investor.lilly.com/static-files/2f9b7bb1-f955-448d-b... Significant mentions of "compliance" (most are legal issues). However, a decent number of warning statements about how government compliance will require significant effort. No actual numbers I could find. Main Finanacial is pg 57. [2] Merck, 2022 Annual Report: https://www.emdgroup.com/en/annualreport/2022/_assets/downloads/entire-emd-ar22.pdf https://www.emdgroup.com/en/annualreport/2022/_assets/downlo... 200+ mentions of "compliance" (most are legal issues, it's a lot to check) Pg 148 has "number of self reported compliance violations. Most are fraud or "against company values". 79 reported with 28 confirmed. Main financials start pg 230. There was some about "compliance with audits", yet nothing I could find that was a line item for "government process compliance" or something similar. [3] Johnson & Johnson, 2022 Annual Report: https://www.investor.jnj.com/files/doc_financials/2022/ar/2022-annual-report.pdf https://www.investor.jnj.com/files/doc_financials/2022/ar/20... Significant mentions of "compliance" (most are legal issues, J&J has a "bunch" of lawsuits in Canada vs generics). Could not find a direct reference to cost of government compliance, although I did read a part that implied it seemed to be rolled into R&D somewhere. Financial Statement is at pg 54, although the $ numbers start quite a bit earlier. [4] Bristol Myers Squibb, 2022 Annual Report: https://annual-report.bms.com/assets/bms-ar/documents/2022-bms-annual-report.pdf https://annual-report.bms.com/assets/bms-ar/documents/2022-b... Notably, has a neat list of the main compounds currently under investigation with various groups, and "products in pipeline developments" (basically drug status updates). Only 2 mentions of compliance, both are officers. Financials are pg 40 in the pdf. Also, there is something wrong with their PDF format, because search is very obviously broken (at least on Firefox). So there might be something hiding in there that's just not being searched correctly. Anyway, best effort for a half hour of avoiding working on anything, and did not find a number source.

mywacaday 3y ago
Great work, I'll try and take a look at some of the reports over the weekend, you've piqued my interest to dig further