Re: The Bull*** Parade

From: Matti Narkia (mnng1_REMOVE_THIS_at_despammed.com)
Date: 07/16/04 

Date: Fri, 16 Jul 2004 18:20:33 +0300

16 Jul 2004 09:15:01 -0500 in article <cd8nt5$c4s@mean.stat.purdue.edu>
hrubin@mean.stat.purdue.edu (Herman Rubin) wrote:
>
>It is large scale testing which is the big expense. Often the
>small scale testing is done by smaller organizations, who then
>find a big company to help with the big risk.
>
I refer again to the NEJM's editorial

Angell M.
The pharmaceutical industry--to whom is it accountable?
N Engl J Med. 2000 Jun 22;342(25):1902-4
<URL:http://content.nejm.org/cgi/content/full/342/25/1902>
<URL:http://www.mercola.com/2000/jun/24/pharmaceutical_industry.htm>
<URL:http://www.karlloren.com/Diabetes/p17.htm>

where Dr. Angell writes about drug companies R&D costs as follows:

    "The top 10 drug companies are reported to spend on average
    about 20 percent of their revenues on research and development.
    (9) (Many critics charge that marketing and promotional costs
    are misleadingly included in this figure.) But the
    pharmaceutical giants have so many drugs in the pipeline at any
    given time that they can count on being able to bring a certain
    number of drugs to market regularly."

and the compares these costs to the profits of these companies:

    "It is instructive to compare the research and development costs
    of the large drug companies with their profits. The top 10 drug
    companies are reported to have profits averaging about 30
    percent of revenues -- a stunning margin. (4,10) Over the past
    few years, the pharmaceutical industry as a whole has been by
    far the most profitable industry in the United States. (9,11)
    According to a recent issue of Fortune, in 1999 the
    pharmaceutical industry realized on average an 18.6 percent
    return on revenues. Commercial banking was second, at 15.8
    percent, and other industries ranged from 0.5 to 12.1 percent.
    (11) An industry whose profits outstrip not only those of every
    other industry in the United States, but often its own research
    and development costs, simply cannot be considered very risky."

It seems that whatever risks the big pharma has to take, they are not very
large. 

-- 
Matti Narkia