5 ms·
> a price in line with expected clinical benefits to patients What would a price in line with recouping R&D and production costs and, say, a 20% profit margin
by pjmorris 2y ago
> a price in line with expected clinical benefits to patients
What would a price in line with recouping R&D and production costs and, say, a 20% profit margin be?
- thefounder 2y agoIt may not be fair math. The company may bet on 10 different things and just one pays off. It needs to pay off for the bad bets as well.
- gramie 2y ago> in line with recouping R&D and production costs That's the "recouping R&D" part.
- thefounder 2y agoAnd who invests in companies that merely recoup the R&D ?
- datavirtue 2y agoIt seems like a previous comment pointing out how investors actually fund new drug development seems to track with the loads of pharma startups working on one thing each. Run some stock screeners on your brokerage account. You have to work to generate a list without a pharma startup on it.
- s1artibartfast 2y agoA big part of this businesses model is because only large Pharma companies are equipped to handle the regulatory barriers and large enough to negotiate with the PBMs
- jdietrich 2y agoIn their last 10-K, Bristol Myers Squibb reported an operating income of $8.4bn on sales of $43.7bn, giving them a gross profit margin of just over 19%. https://www.sec.gov/ix?doc=/Archives/edgar/data/14272/000001427224000044/bmy-20231231.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/14272/000001...
- cma 2y agoYou shouldn't look at R&D on one product, since lots fail. Would be like saying a record label that funds 100 artists with 1 being profitable should have a strict 20% profit cap on the profitable one. That wouldn't allow ongoing funding of the broader pool of bets.
- givemeethekeys 2y agoHow much of the record label's music production is funded by tax dollars?
- throwup238 2y agoDavid Bowie, Mick Jagger and Keith Richards, John Lennon and Paul McCartney. The list of musicians who were “on the dole” to support their music careers before they made it big is huge. It’s almost a cliche at this point. And when they do make it big, their biggest concerts are usually held in stadiums that were heavily subsidized by tax payers. Besides, Bristol Meyers Squibb acquired this drug for $14 billion which is bigger than the annual budget of the entire NSF. For a single drug. Tax payers weren’t the ones on the hook for that.
- givemeethekeys 2y agoDo record labels in the UK get funding too? I'd imagine artists getting funding is like scientists getting funding, where as record labels getting funding is more like pharmaceuticals companies getting funding.
- cma 2y agoThat's fine but even considering that, is 20% only on successes enough to fund the rest of the portfolio that fails? And will it pass the risk free rate of return you can get from money markets or treasuries or whatever?
- s1artibartfast 2y agoIn what sense are you proposing pharma production is funded by tax dollars? Selling a product to the taxpayers is not the same as funding.
- throwup238 2y agoBristol Myers Squibb acquired Karuna Therapeutics, the company behind Cobenfy (formerly KarXT), for $14 billion earlier this year so that’s their break even for the drug and presumably what their investors thought was fair. I don’t think Karuna had anything else interesting in trials so they have to recoup all of that from Cobenfy before they’re in the black on the acquisition. Pharmaceutical companies offload most of the risk onto institutional investors and the public (most biotechs IPO pre-revenue to fund clinical trials) but the flipside is that they have to pay eye-watering sums to acquire promising drugs.