How Profitable Is Manufacturing Prescription Drugs?

By Author: EMRIndustry
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How profitable prescription drug manufacturers should be allowed to be is a controversial topic in the United States. High prescription drug prices are often cited as one of the top concerns with the American healthcare system, with many low-income patients rationing medication because they can not afford to pay for it. However, drug manufacturers argue that attempts to reduce the price of prescription drugs could lead to a lack of innovation in the industry, resulting in fewer life-saving medications being developed. Just how profitable is the industry?

Pharmaceutical Companies Are More Profitable Than Most Other Industries

Research published in the “Journal of the American Medical Association” reported that between the years 2000 and 2018, the top 35 drug companies produced $11.5 trillion in revenue, of which $8.6 trillion was profit. The industry, which has been experiencing steady manufacturing sales growth, had almost twice the median net income margin as the 357 non-pharmaceutical companies in the S&P 500. However, they also noted that the profits of pharmaceutical companies are not very different than that of other research and innovation-driven technology companies.