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Obscene Pharma Profits

November 30, 2009 | A version of this story appeared in Volume 87, Issue 48

The C&EN issue of Aug. 17 includes an article that I found a bit troubling. On page 22 is the article headlined "Pharma Continues To Flounder" and adds the subhead that includes "U.S. companies have lackluster results in the second quarter."

A table notes that the second-quarter profit margin for "Total Big Pharma" was 24.1% and that for the first half of 2009 was 24.2%, in both cases somewhat higher than for the corresponding periods in 2008. Both figures, as always is true in your quarterly reports of such data, far outstrip the profit margins of big chemical companies, whose data usually are in the single digits. These percentages are after taxes and business expenses, which include the much-needed research costs so often noted as justifying the high cost of prescription drugs in the U.S., as well as huge amounts for television advertising and lobbying Congress.

I would appreciate C&EN telling me how the above data justify the article's headline. In addition, perhaps someone can suggest why such admirable profit margins do not suggest that lower prescription drug prices could be instituted while still providing stockholders with a fine return on their investments.

Robert R. Winkler
Pleasant Hill, Tenn.


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