Profits and R&D
The drug companies are making record profits and not investing those profits back into R&D.
- The truth is that more than 90% of drug companies are unprofitable…and the industry as a whole ranks 36th (out of 126 industries) in terms of overall profitability—behind sectors such as food retail, auto parts, and apparel/footwear.
- The biopharmaceutical industry also has the highest rate of R&D reinvestment of any sector, approximately 21.3%.
- Drug companies spend much more on R&D than advertising and marketing. Global Pharmaceutical companies spent over $150B in 2014 on R&D vs. just $4.6B on Direct to Consumer Advertising, or DTC.
- And it is important to keep in mind that 70% of all clinical trials are happening at small biotechnology companies.
Additional Reading & Resources
BIO Infographic; Biopharmaceutical Sector, A Driver of Innovation
Factset, BIO Industry Analysis
EvaluatePharma, World Preview 2016, Outlook to 2022, Sept 2016 2014: $143.1B, 2015: 149B.