9 Out Of 10 Big Pharma Companies Spent More On Marketing Than On R&D

Source: Dadaviz
See Also: John Oliver attacked Big Pharma last night. Here’s one important thing he left out. (WonkBlog)

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  1. chartist commented on Feb 12

    Thank you for mentioning this situation. About 4 years ago, I heard a study evaluating the ROI for R&D among the top 10 pharma companies world-wide and I believe only Novartis had a positive ROI from R&D.

  2. odnalro zeraus commented on Feb 12

    While the purpose of the chart is not to compare the companies, but to match marketing vs. R&D expenses incurred by each; nevertheless it should be noted that there is a significant lack of comparability, as the amount of consumer products versus ethical (prescription) drugs business, by each company, varies tremendously and some may not have both types in their portfolio.
    For example, J&J does a very significant consumer business while Roche does mostly ethical products.
    Another less significant factor to consider when interpreting the chart, but still worth mentioning is that pharma companies “window dress” their results by maximizing the R&D expenditures. Many expenses that the typical investor, or common senses dictates, should not be consider R&D are thrown in that caption of the Income statement to show the larger possible amount of R&D and the annual growth of it. Many companies throw 100% the expenses incurred by the Quality Control Department into R&D to inflate it, when QC expenses are generally incurred to control the quality of the production and handling of all products produced. Both new and old. The motivation is two-fold – 1) to show how much they do to create new products and 2) how costly to discover new products is to justify their horrendous prices. Auditing companies are generally, very accommodative about this.

  3. SecondLook commented on Feb 12

    There is an elegant solution to this particular problem in health care: Convert Pharmaceutical companies to non-profit.
    From personal knowledge I can attest that researchers, given decent salaries, and great labs, will produce the same quality of R&D, indifferent to profits.
    Which is supposed to be the primary function of a drug company: original and improved medications that will benefit society.
    Shareholders can be bought out, on a decent pro-rated basis using enterprise value. Think ethically going private.
    The losers? Employees relying on stock appreciation for their wealth, i.e. senior management.

    I know, never going to happen…

    • GetReal1 commented on Feb 13

      Not sure about making pharmaceutical companies non-profit will help or not. The most profitable hospitals happen to be non-profit. Where I am from, the local non-profit hospitals make enough money to expand and build huge complexes and pay massive salaries to administrators. I’m sure that they don’t work out the best deals with their suppliers either. I believe that there was a Time article referencing some of this too (Bitter Pill: Why Medical Bills Are Killing Us).

      Anyways, if non-profits can be better regulated to control salaries/bonuses, costs, and limit advertising, maybe this would be the best way to go. I agree with you that R&D likely will not change.

  4. DeDude commented on Feb 13

    It should be noted that a substantial part of drug research is conducted at academic institutions and paid for by your tax dollars. Drug companies have moved further and further down the line of new drug development, relying on their ability to outgun and outmaneuver taxpayer funded research institutions and harvest the profits from public research. To add injury to insult they then patent products and gauge consumers who want to benefit from these taxpayer funded discoveries. There is no reason to believe that the for-profit sector can do the last few steps to the pill-pressing machine any better than the public sector. So lets make it he law that any patent that is in any way benefitting from public research findings are banned from being used in the for-profit sector. If they want to eat our cake they can make it themselves.

  5. WFTA commented on Feb 13

    In defence of JNJ, R&D won’t sell many Q-Tips.

    Have a swell weekend.

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