Drug costs arent so high because of profits, it is because of costs. How much profit does a drug company make over their revenue? 10%? 12%? If drug companies are so damn profitable, why are they laying off hundreds of research chemists year after year?
Originally Posted by MattKing
No the problem is because of COSTS. From wikipedia: Drug companies are like other companies in that they manufacture products that must be sold for a profit in order for the company to survive and grow. They are different from some companies because the drug business is very risky. For instance, only one out of every ten thousand discovered compounds actually becomes an approved drug for sale. Much expense is incurred in the early phases of development of compounds that will not become approved drugs. In addition, it takes about 7 to 10 years and only 3 out of every 20 approved drugs bring in sufficient revenue to cover their developmental costs, and only 1 out of every 3 approved drugs generates enough money to cover the development costs of previous failures. This means that for a drug company to survive, it needs to discover a blockbuster (billion-dollar drug) every few years.
How do you fund that kind of risk?