6 ms·

Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? If it's the latter, I don't have enough information about the rest of

Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? If it's the latter, I don't have enough information about the rest of J&J to draw any conclusions.

s1artibartfast 3y ago
Financially, they are the same. If you can make more money by not doing X, than doing X, it doesnt matter.
- interstice 3y ago
  That rules out just about any non regulated altruism. Eg open source
  - s1artibartfast 3y ago
    Charitable donations and altruism are outside the scope of financial analysis. You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
  - lend000 3y ago
    Individuals can and do make non-financially motivated decisions. But in larger groups, especially a large corporation like J&J, you can apply the law of large numbers and determine that decisions are a result of incentives (primarily money).
- kurthr 3y ago
  I guess all doctors should be cosmetic surgeons then? Seriously, the argument is that drug companies should only do the most profitable thing? If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit. Just see what happened with the opioid epidemic. If you're only looking at next quarters profits and destroy public trust, while skirting the legal boundaries you'll make bank until you're not. https://www.bbc.com/news/world-us-canada-60610707 https://www.bbc.com/news/world-us-canada-60610707
  - s1artibartfast 3y ago
    >Seriously, the argument is that drug companies should only do the most profitable thing? You're the first one to make any kind of suggestion for what they should do, so I'm not sure why you're jumping to that conclusion >If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit. The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground. In your analogy, drug companies are the doctors. They want to make money for saving your life. Why would you want to regulate them out of existence?
    - kurthr 3y ago
      Your response to: >Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? was: >If you can make more money by not doing X, than doing X, it doesnt matter. It's confusing, because you certainly seem to imply only doing the most profitable things. >The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground. My point was that if their purpose is only to do the things that make marginally more money (while killing significant numbers of people or allowing them to die) such as the Sacklers and Purdue with Oxy, they deserve to be regulated into oblivion. If you think the heavy marketing and distribution of known addictive drugs into disadvantaged areas of the country is in the public interest, then I don't think we will find much common ground. Frankly, most doctors, biochemists, and pharma-chemists I know have little difficulty seeing this. It is about helping people not just making money, and doing otherwise while selling it as the former, is unethical.
      - s1artibartfast 3y ago
        >It's confusing, because you certainly seem to imply only doing the most profitable things. I thought I was clear, but I will try again. The financial calculus is the same between "losing money" and "not worth it". It doesnt matter if the J&J division of communicable disease is running a positive or negative balance if J&J (or its owners) can more doing something entirely different. The question is do we want to be losing money on this. That is not to say they can't or shouldnt keep doing it as a public service or out of altruism, but the question is the same. >My point was that if their purpose is only to do the things that make marginally more money. I dont think that is a valid assumption to make about the industry. 99.9% of the time, the way to make more money is to make a product that saves or cures more people. If your product saves fewer people, People would by the old thing instead of the new thing for 2x the price. Now, everyone is free to say they dont like the price, which is fair. However, the price is high because rich American customers dont care about the price. IF they did, they could always buy the cheap old thing. It is like someone who is angry at the butcher for the price of filet minion, but keeps paying ever higher prices, and refuses to buy the tri-tip. Europeans prices are half the US simply because they stop buying filet minion and get tri-tip when the price gets too high. US prices are twice that because we pay it! It is crazy to blame the butcher for raising the price when you willingly keep throwing more money at ever higher prices! No industry anywhere in the world expects the seller to keep prices low when customers keep throwing money at them. The fundamental problem with US healthcare costs is that not one party in the system is willing to control spending. Nobody will say no to a treatment 1% better for 200% the cost. Patients will pay anything for the latest drug because they want it, and the costs get spread over everyone's premium. Insurance is happy to see medical costs balloon because their profit is capped as a % of healthcare costs. manufacturers are happy to see costs go up, because that's what they are selling.
- antasvara 3y ago
  To J&J it doesn't matter, but it's a useful number to understand the industry as a whole. When a pharmaceutical leader says that developing new drugs "isn't profitable," it would be nice to know if that meant "clinical trials don't make as much money as cosmetic drugs" or "clinical trials actively lose us money."
- Dylan16807 3y ago
  Financially, they are definitely not the same. A company where revenue is 90% of expenses is in big trouble. Another company that could make 120%, but is only making 110%, is doing fine. More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. And if that division was doing something useful, it can be negative for the public if it's shut down entirely, so it's worth wondering how we could save these still-profitable endeavors.
  - aleph_minus_one 3y ago
    > More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. Opportunity cost.
    - Dylan16807 3y ago
      > Opportunity cost. That's why I specifically said "great need". Opportunity cost is not usually dire. But in a global sense, shutting divisions down entirely also tends to be pretty bad in terms of opportunity cost.
  - bryanrasmussen 3y ago
    >Another company that could make 120%, but is only making 110%, is doing fine. what if every other company in your industry is making 135% and hiring all the best people away from you. Not being in line with the rest of your industry also has negative consequences for the future of a company.
    - Dylan16807 3y ago
      I assume those other companies are paying more money in this hypothetical? If so, that's the problem, not the amount of profit. Increase pay to match, making the profit 105% of expenses, is there still an issue? If there are other negative consequences I need you to explain them. (Side note, if you say everyone else is making 135%, but our company could only make 120% if we switched focus, are you sure it's not us that's paying higher salaries?)

Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? If it's the latter, I don't have enough information about the rest of J&J to draw any conclusions.

s1artibartfast 3y ago

Financially, they are the same. If you can make more money by not doing X, than doing X, it doesnt matter.

interstice 3y ago
That rules out just about any non regulated altruism. Eg open source
- s1artibartfast 3y ago
  Charitable donations and altruism are outside the scope of financial analysis. You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
- lend000 3y ago
  Individuals can and do make non-financially motivated decisions. But in larger groups, especially a large corporation like J&J, you can apply the law of large numbers and determine that decisions are a result of incentives (primarily money).
kurthr 3y ago
I guess all doctors should be cosmetic surgeons then? Seriously, the argument is that drug companies should only do the most profitable thing? If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit. Just see what happened with the opioid epidemic. If you're only looking at next quarters profits and destroy public trust, while skirting the legal boundaries you'll make bank until you're not. https://www.bbc.com/news/world-us-canada-60610707 https://www.bbc.com/news/world-us-canada-60610707
- s1artibartfast 3y ago
  >Seriously, the argument is that drug companies should only do the most profitable thing? You're the first one to make any kind of suggestion for what they should do, so I'm not sure why you're jumping to that conclusion >If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit. The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground. In your analogy, drug companies are the doctors. They want to make money for saving your life. Why would you want to regulate them out of existence?
  - kurthr 3y ago
    Your response to: >Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth the time'? was: >If you can make more money by not doing X, than doing X, it doesnt matter. It's confusing, because you certainly seem to imply only doing the most profitable things. >The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground. My point was that if their purpose is only to do the things that make marginally more money (while killing significant numbers of people or allowing them to die) such as the Sacklers and Purdue with Oxy, they deserve to be regulated into oblivion. If you think the heavy marketing and distribution of known addictive drugs into disadvantaged areas of the country is in the public interest, then I don't think we will find much common ground. Frankly, most doctors, biochemists, and pharma-chemists I know have little difficulty seeing this. It is about helping people not just making money, and doing otherwise while selling it as the former, is unethical.
    - s1artibartfast 3y ago
      >It's confusing, because you certainly seem to imply only doing the most profitable things. I thought I was clear, but I will try again. The financial calculus is the same between "losing money" and "not worth it". It doesnt matter if the J&J division of communicable disease is running a positive or negative balance if J&J (or its owners) can more doing something entirely different. The question is do we want to be losing money on this. That is not to say they can't or shouldnt keep doing it as a public service or out of altruism, but the question is the same. >My point was that if their purpose is only to do the things that make marginally more money. I dont think that is a valid assumption to make about the industry. 99.9% of the time, the way to make more money is to make a product that saves or cures more people. If your product saves fewer people, People would by the old thing instead of the new thing for 2x the price. Now, everyone is free to say they dont like the price, which is fair. However, the price is high because rich American customers dont care about the price. IF they did, they could always buy the cheap old thing. It is like someone who is angry at the butcher for the price of filet minion, but keeps paying ever higher prices, and refuses to buy the tri-tip. Europeans prices are half the US simply because they stop buying filet minion and get tri-tip when the price gets too high. US prices are twice that because we pay it! It is crazy to blame the butcher for raising the price when you willingly keep throwing more money at ever higher prices! No industry anywhere in the world expects the seller to keep prices low when customers keep throwing money at them. The fundamental problem with US healthcare costs is that not one party in the system is willing to control spending. Nobody will say no to a treatment 1% better for 200% the cost. Patients will pay anything for the latest drug because they want it, and the costs get spread over everyone's premium. Insurance is happy to see medical costs balloon because their profit is capped as a % of healthcare costs. manufacturers are happy to see costs go up, because that's what they are selling.
antasvara 3y ago
To J&J it doesn't matter, but it's a useful number to understand the industry as a whole. When a pharmaceutical leader says that developing new drugs "isn't profitable," it would be nice to know if that meant "clinical trials don't make as much money as cosmetic drugs" or "clinical trials actively lose us money."
Dylan16807 3y ago
Financially, they are definitely not the same. A company where revenue is 90% of expenses is in big trouble. Another company that could make 120%, but is only making 110%, is doing fine. More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. And if that division was doing something useful, it can be negative for the public if it's shut down entirely, so it's worth wondering how we could save these still-profitable endeavors.
- aleph_minus_one 3y ago
  > More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. Opportunity cost.
  - Dylan16807 3y ago
    > Opportunity cost. That's why I specifically said "great need". Opportunity cost is not usually dire. But in a global sense, shutting divisions down entirely also tends to be pretty bad in terms of opportunity cost.
- bryanrasmussen 3y ago
  >Another company that could make 120%, but is only making 110%, is doing fine. what if every other company in your industry is making 135% and hiring all the best people away from you. Not being in line with the rest of your industry also has negative consequences for the future of a company.
  - Dylan16807 3y ago
    I assume those other companies are paying more money in this hypothetical? If so, that's the problem, not the amount of profit. Increase pay to match, making the profit 105% of expenses, is there still an issue? If there are other negative consequences I need you to explain them. (Side note, if you say everyone else is making 135%, but our company could only make 120% if we switched focus, are you sure it's not us that's paying higher salaries?)