Let’s be clear. I’m not a fan of “big pharma” which I believes does excessive profiteering on the misfortunes of individuals and families. However, I blasted someone this week for a comment about the industry “creating diseases” in increase profits.
I realized after making that response that there is a lot of information about the pharmaceutical industry that people don’t have. Unless you have some grasp of sources of revenue, it’s easy to take cheap shots at the industry and ignore the real issues that need fixing.
First, the baseline: Statista estimates global pharmaceutical revenue for 2021 to be $1.42 trillion USD.(1) That’s up from $1.27 trillion in 2020. Big numbers.
- $794 million of the 2021 number is from prescription drug sales, excluding orphan drugs and generics. That was up from $689 million in 2020.(2)
- Diabetes drugs account for more than $50 million of 2021 revenue.(5)
- Covid vaccine revenue outpaced diabetes in 2021, with Pfizer reporting $36.8 billion in revenue (6) and Moderna estimated at $13.2 billion.
- Oncology drug revenues may actually surpass the Covid vaccine numbers. That’s something I’m still exploring.
- Finally, once the hoopla fades, profit margins on vaccines are usually much lower than the profits on other disease categories. During the Covid fire drill, profits have been absurd, but that won’t last. More vendors are entering the market (a fourth vaccine was given emergency approval for the US this week) and competition with eat at profits.
- However, 49% of pharma revenue globally is from North America, reflecting the fact that US consumers continue to pay far more for drugs than do consumers in other countries.
What does all this mean, exactly? Simply, vaccines aren’t the mainstay of the pharmaceutical industry. No one is going to commit fraud to hype a vaccine in the way that was apparently done with opioids. Vaccines are a piece of the pharmaceutical business, not the major part of the business.
Emergencies happen and there will be significant spending to meet challenges when they do. Fire drill research and development is expensive. However, emergencies do have a defined period. While Covid-19 remains a major problem, it is no longer a fire drill — although people declining vaccination are simply begging for early entry to a nursing home.
Of greater concern is pricing and profits for established drugs like insulin. Development costs for these drugs were fully compensated years ago and manufacturing costs are known and relatively constant. Price increases amount to pure profit-taking at the expense of patients and taxpayers.