5 ms·

I hear that a lot, but have never seen numbers. Googling it doesn't help me either. Would you know of any resources?

complaintdept 2y ago
https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... I'm sure there's plenty more out there.
js2 2y ago
Derek Lowe is as good a source as any (he works as a research scientist but I've always believe writes in good faith): https://www.science.org/content/blog-post/don-t-drug-companies-spend-more-marketing https://www.science.org/content/blog-post/don-t-drug-compani... Pharma companies spend about 2x on sales and administration as they do on R&D. However, this compares favorably to large tech companies where the ratio is closer to 2-8x. So yes, the statement that "pharma companies spend more marketing drugs than developing them" seems strictly true, but lacks context. Therefor, I rate this claim: mostly true. :-)
- mandmandam 2y ago
  I think the main difference there is that tech companies don't spend 67% of their marketing money schmoozing your doctor. Of the $30 billion that Pharmas spends marketing in the US, $20bn is aimed at doctors. There's about a million doctors in the US. That's ~$20,000 per doctor, each of whom has a significant degree of implicit trust and authority. Even if a doctor believes they are not swayed by marketing, studies have shown that these efforts can subconsciously affect their decisions. And $20k/year/doctor just seems awfully high. There must be a more efficient way to help doctors make those sorts of decisions... *** Responding by edit due to rate limit: > Who else should they advertise to then? No one. It's not a brand affiliation issue, it's a facts and awareness issue. Doctors can read journals and papers and peer reviews just fine! There's no need for them to be told what to do on paid Hawaiian vacation weekends in 5 star hotels. You can see why they prefer things this way though. > it is morally worse to advertise and influence people who don't know any better. So don't.
  - HeatrayEnjoyer 2y ago
    At that price they might have teams dedicated to groups of a few dozen doctors, perfecting the company's manipulation to each of the doctors' personality. Somehow for-profit pharma always finds a way to be even more horrifying...
    - mandmandam 2y ago
      They are already doing this, without doubt. They identify thought leaders, analyze their data (who knows what data and how they analyze it?) to identify the best approaches, and have salesfolk and MSLs assigned to specific doctors, all to build relationships with tailored approaches and proven strategies. This is coupled with gifts disguised in various ways. It bears repeating: submissions to the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, hit 97,252 in 2016. This resulted in 11 violation letters. Ninety-seven thousand submissions. Eleven violation letters. No typo. $20k/doc/yr. There may be more recent stats; I'm not finding them right now.
  - tomohelix 2y ago
    Who else should they advertise to then? The consumers aren't knowledgeable enough to make the decision on which drug they should take. Doctors are the only one qualified. In fact, it is morally worse to advertise and influence people who don't know any better. At least, doctors are educated and it is their duty, both ethically and professionally, to learn about new drugs that best treat their patients. That is the whole point of a Medical Science Liaison. They are the "advertisers" for a pharma to make sure doctors know about the drug their companies make. Mind you, at this level, advertising is a bit different. These MSLs are legally required to disclose both the indicators and the side effects and have strict rules in what they are allowed to give and say to doctors. There are hundreds of laws in place to prevent corruption/bribery. Of course there are bad actors everywhere, but at least, it is more regulated than Congress's "lobbying" and Supreme Court's "gifts".
    - FireBeyond 2y ago
      The US and NZ are the only two countries in the world that allow direct-to-consumer advertising of prescription medications - and New Zealand is trying to get rid of it (and only allowed it following pressure from the US for a trade agreement).
- credit_guy 2y ago
  Here's a report from the Congressional Budget Office [1] that states that as of 2019 the Pharma industry in the US spent $83 Billion on R&D. And here's a Statista link with the total Pharma advertising in the US per month. About $1.1 BN, which would annualize to less than $15 BN per year. So no, the Pharma industry does not spend more on advertising than on R&D, not even close. [1] https://www.cbo.gov/publication/57126 https://www.cbo.gov/publication/57126 [2] https://www.statista.com/statistics/1407234/pharma-ad-spend-us/ https://www.statista.com/statistics/1407234/pharma-ad-spend-...
  - js2 2y ago
    You're not comparing the same numbers as Lowe did. So first thing, I was just summarizing what Derek Lowe wrote in 2013. If you click through, what he's comparing is SG&A to R&D. Quoting his post: We're talking SG&A, "sales, general, and administrative". That's the accounting category where all advertising, promotion and marketing ends up. Executive salaries go there, too, in case you're wondering. Interestingly, R&D expenses technically go there as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A". What most companies don't do is break out the S part separately: just how much they spend on marketing (and how, and where) is considering more information than they're willing to share with the world, and with their competition. That means that when you see people talking about how Big Pharma spends X zillion dollars on marketing, you're almost certainly seeing an argument based on the whole SG&A number. Anything past that is a guess - and would turn out to be a lower number than the SG&A, anyway, which has some other stuff rolled into it. Most of the people who talk about Pharma's marketing expenditures are not interested in lower numbers, anyway, from what I can see. So we'll use SG&A, because that's what we've got. What he found is that SG&A spending was about twice R&D spending in 2013, then compared that ratio (2x) to large tech companies where the ratio was even worse (up to 8x). For the pharma companies, SG&A was about 30% of revenue while R&D was anywhere from 12.5%-25% of revenue. (See his post I linked for the exact numbers he used.) Now, looking at your CBO report, one thing I note is this tidbit: The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000. So R&D spending as a percent of revenue has increased to 25% industry wide since Lowe's post where it seemed to be a bit lower. Search for SG&A spending in the pharma industry, I ended up like you did at statista: https://www.statista.com/statistics/266321/sganda-to-sales-rate-of-top-pharmaceutical-companies/ https://www.statista.com/statistics/266321/sganda-to-sales-r... The range is 38%-52%. So SG&A spending (50% of revenue) is still about 2x R&D spending (25% of revenue), with the numbers being a bit better than when Lowe wrote his post in 2013. Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know. I was just going by what Lowe wrote since he works in the pharma industry and is a well-respected name on this site.
deleted 2y ago
[deleted]

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... I'm sure there's plenty more out there.

js2 2y ago

Derek Lowe is as good a source as any (he works as a research scientist but I've always believe writes in good faith): https://www.science.org/content/blog-post/don-t-drug-companies-spend-more-marketing https://www.science.org/content/blog-post/don-t-drug-compani... Pharma companies spend about 2x on sales and administration as they do on R&D. However, this compares favorably to large tech companies where the ratio is closer to 2-8x. So yes, the statement that "pharma companies spend more marketing drugs than developing them" seems strictly true, but lacks context. Therefor, I rate this claim: mostly true. :-)

mandmandam 2y ago
I think the main difference there is that tech companies don't spend 67% of their marketing money schmoozing your doctor. Of the $30 billion that Pharmas spends marketing in the US, $20bn is aimed at doctors. There's about a million doctors in the US. That's ~$20,000 per doctor, each of whom has a significant degree of implicit trust and authority. Even if a doctor believes they are not swayed by marketing, studies have shown that these efforts can subconsciously affect their decisions. And $20k/year/doctor just seems awfully high. There must be a more efficient way to help doctors make those sorts of decisions... *** Responding by edit due to rate limit: > Who else should they advertise to then? No one. It's not a brand affiliation issue, it's a facts and awareness issue. Doctors can read journals and papers and peer reviews just fine! There's no need for them to be told what to do on paid Hawaiian vacation weekends in 5 star hotels. You can see why they prefer things this way though. > it is morally worse to advertise and influence people who don't know any better. So don't.
- HeatrayEnjoyer 2y ago
  At that price they might have teams dedicated to groups of a few dozen doctors, perfecting the company's manipulation to each of the doctors' personality. Somehow for-profit pharma always finds a way to be even more horrifying...
  - mandmandam 2y ago
    They are already doing this, without doubt. They identify thought leaders, analyze their data (who knows what data and how they analyze it?) to identify the best approaches, and have salesfolk and MSLs assigned to specific doctors, all to build relationships with tailored approaches and proven strategies. This is coupled with gifts disguised in various ways. It bears repeating: submissions to the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, hit 97,252 in 2016. This resulted in 11 violation letters. Ninety-seven thousand submissions. Eleven violation letters. No typo. $20k/doc/yr. There may be more recent stats; I'm not finding them right now.
- tomohelix 2y ago
  Who else should they advertise to then? The consumers aren't knowledgeable enough to make the decision on which drug they should take. Doctors are the only one qualified. In fact, it is morally worse to advertise and influence people who don't know any better. At least, doctors are educated and it is their duty, both ethically and professionally, to learn about new drugs that best treat their patients. That is the whole point of a Medical Science Liaison. They are the "advertisers" for a pharma to make sure doctors know about the drug their companies make. Mind you, at this level, advertising is a bit different. These MSLs are legally required to disclose both the indicators and the side effects and have strict rules in what they are allowed to give and say to doctors. There are hundreds of laws in place to prevent corruption/bribery. Of course there are bad actors everywhere, but at least, it is more regulated than Congress's "lobbying" and Supreme Court's "gifts".
  - FireBeyond 2y ago
    The US and NZ are the only two countries in the world that allow direct-to-consumer advertising of prescription medications - and New Zealand is trying to get rid of it (and only allowed it following pressure from the US for a trade agreement).
credit_guy 2y ago
Here's a report from the Congressional Budget Office [1] that states that as of 2019 the Pharma industry in the US spent $83 Billion on R&D. And here's a Statista link with the total Pharma advertising in the US per month. About $1.1 BN, which would annualize to less than $15 BN per year. So no, the Pharma industry does not spend more on advertising than on R&D, not even close. [1] https://www.cbo.gov/publication/57126 https://www.cbo.gov/publication/57126 [2] https://www.statista.com/statistics/1407234/pharma-ad-spend-us/ https://www.statista.com/statistics/1407234/pharma-ad-spend-...
- js2 2y ago
  You're not comparing the same numbers as Lowe did. So first thing, I was just summarizing what Derek Lowe wrote in 2013. If you click through, what he's comparing is SG&A to R&D. Quoting his post: We're talking SG&A, "sales, general, and administrative". That's the accounting category where all advertising, promotion and marketing ends up. Executive salaries go there, too, in case you're wondering. Interestingly, R&D expenses technically go there as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A". What most companies don't do is break out the S part separately: just how much they spend on marketing (and how, and where) is considering more information than they're willing to share with the world, and with their competition. That means that when you see people talking about how Big Pharma spends X zillion dollars on marketing, you're almost certainly seeing an argument based on the whole SG&A number. Anything past that is a guess - and would turn out to be a lower number than the SG&A, anyway, which has some other stuff rolled into it. Most of the people who talk about Pharma's marketing expenditures are not interested in lower numbers, anyway, from what I can see. So we'll use SG&A, because that's what we've got. What he found is that SG&A spending was about twice R&D spending in 2013, then compared that ratio (2x) to large tech companies where the ratio was even worse (up to 8x). For the pharma companies, SG&A was about 30% of revenue while R&D was anywhere from 12.5%-25% of revenue. (See his post I linked for the exact numbers he used.) Now, looking at your CBO report, one thing I note is this tidbit: The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000. So R&D spending as a percent of revenue has increased to 25% industry wide since Lowe's post where it seemed to be a bit lower. Search for SG&A spending in the pharma industry, I ended up like you did at statista: https://www.statista.com/statistics/266321/sganda-to-sales-rate-of-top-pharmaceutical-companies/ https://www.statista.com/statistics/266321/sganda-to-sales-r... The range is 38%-52%. So SG&A spending (50% of revenue) is still about 2x R&D spending (25% of revenue), with the numbers being a bit better than when Lowe wrote his post in 2013. Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know. I was just going by what Lowe wrote since he works in the pharma industry and is a well-respected name on this site.

deleted 2y ago

[deleted]