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  Myths & Facts of Pharmaceutical Industry : Episode3 - Drug Research and Development Bookmark and Share

Table of Contents

  Episode 1: Drug Price
  -  Myth: Medicines are expensive in Thailand
  -  Myth: Multinational Pharmaceutical companies can set their own prices

 Episode 2: Industry Profits
  -  Myth: The pharmaceutical Industry is the most profitable industry
  -  Myth: A member of the pharmaceutical industry participated in a THB 1 million per head dinner

 Episode 3: Drug Research & Development
  -  Myth: The pharmaceutical industry invests only 5% in R&D while marketing expenditure was as high as 13%

 Episode 4: Patent and Compulsory Licensing
  -  Myth: Patent prevents access to medicine and results in the high prices of medicine
  -  Myth: CL can be declared in non emergency situations
  -  Myth: The USA, Canada and Italy have all declared CL

Myth: The pharmaceutical industry invests only 5% in R&D while marketing expenditure was as high as 13%


The cost of R&D in the pharmaceutical industry has been greater than 15% of revenue since 1975: Picture 1

KEY FACT :   Read more about Drug Research & Development here


  • From the PhRMA*** 2007 report, the pharmaceutical industry invests 17.5% of total revenue in research and development; the highest proportion among all industries with the trend continuing to rise year on year[15]

    *** PhRMA is the US Pharmaceutical Research and Manufacturers Association[16]

  • In 2008, the pharmaceutical industry bore a cost of USD 58,800 Million in research and development whilst marketing cost was USD 10,400 Million[17]
  • Pharmaceutical marketing focuses on the provision to healthcare professionals of novel, useful information on the clinical application of medicines and their potential side effects: a step critical to the benefits of the patients. Such information transfer manifest in several forms ranging from the continuing education of the healthcare professionals to drug detailing by pharmaceutical representatives to the provision of trial samples. All are designed to augment the clinicians practical familiarity with novel pharmaceuticals. In addition, all PReMA members abide by the PReMA Sales and Marketing Ethic with a Code Compliance Committee consisting of 3 non PReMA professionals, 1 member of the PReMA Board and 1 Medical Director selected from member companies deliberating allegations of a breach of conduct.

Picture 1: Expenditure in Research and Development[18] 


 Picture 2: A comparison of the R&D expenditures across industries[19] 


  [15] PhRMA 2006, based on data from PhRMA Annual Survey and Standard & Poor's Compusat, a division of McGraw-Hill.
 [17] R&D Spending: Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership Survey, 2008 and Burrill & Company, analysis for PhRMA, 2008; 2 Promotional Data: IMS Health, Integrated Promotional Services™ 8/2009
 [18] Dickson M, Gagnon JP," Key factors in the rising cost of new drug discovery and development", Mature Reviews Drug Discovery3 (2004): 417-429
  [19] PhRMA 2006



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