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Big Pharma more profitable than most public firms

Published on 04/03/20 at 12:09pm

Large pharmaceutical companies make a much larger profit than most other public companies, according to a new study.

The research was published in JAMA’s latest edition and was carried out to show the profitability of the companies making the most drugs in the country.

The researchers conducted a study of 35 large pharmaceutical companies, comparing their profits with that of almost 360 companies in the Standard & Poor 500 Index from 2000 to 2018. This included companies dealing with staple consumer items, materials and industrial equipment. It assessed outcomes like revenue, gross profit, earnings before interest and tax.

The findings showed that both types of companies had similar median revenues of $10.6 billion vs. $8.4 billion for pharma and other companies. The cumulative revenue from the large pharmaceutical companies over the study period was $11.5 trillion. The gross profit was $8.6 trillion while the net income was $1.9 trillion.

The median annual gross profit margins were markedly higher for the big pharma companies compared to other companies.

The study did not include smaller firms conducting research so it cannot be taken as an indication that all pharmaceutical companies make huge profits.

Conor Kavanagh

 

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