Profitability of Large Pharmaceutical Companies Compared With Other Large Public Companies

JAMA
March 3, 2020, Vol 323, No. 9, Pages 809-902
http://jama.jamanetwork.com/issue.aspx

 

Drug Pricing
Original Investigation
Profitability of Large Pharmaceutical Companies Compared With Other Large Public Companies
Fred D. Ledley, MD; Sarah Shonka McCoy, PhD; Gregory Vaughan, PhD; et al.
has active quiz
JAMA. 2020;323(9):834-843. doi:10.1001/jama.2020.0442
Key Points
Question
How do the profits of large pharmaceutical companies compare with those of other companies from the S&P 500 Index?
Findings
In this cross-sectional study that compared the profits of 35 large pharmaceutical companies with those of 357 large, nonpharmaceutical companies from 2000 to 2018, the median net income (earnings) expressed as a fraction of revenue was significantly greater for pharmaceutical companies compared with nonpharmaceutical companies (13.8% vs 7.7%).
Meaning
Large pharmaceutical companies were more profitable than other large companies, although the difference was smaller when controlling for differences in company size, research and development expense, and time trends.