Pharmaceutical companies.
Are the pharmaceutical companies ripping off the public? It is very common to watch TV's so-called “documentaries” and talk show participants speak about the exorbitant profits that the drug companies are reporting or assumed to be making. I reviewed the independent Value Line Investment Survey and the Issue and Review of their drug industry coverage. Keep in mind that recent adverse news on Merck’s Vioxx has resulted in about 30 Billion dollars in lost market valuation. Pfizer has been negatively affected by news on Celebrex. Investors have not benefited from price gains with these two companies. Below are listed some drug companies and their 2004 net profit margins along with their percentage return on share equity. (return on investment)
| Company | 2004 Profit Margin (%) | 2004 Return on Equity.(%) |
| Allergan | 18.10 | 22.50 |
| Barr Pharm | 9.40 | 11.80 |
| Biogen | 5.20 | 1.50 |
| Bristol Meyers | 12,70 | 25.00 |
| Forest Labs | 31.10 | 26.00 |
| Glaxo | 22.22 | 35.00 |
| Lilly | 22.20 | 26.50 |
| Merck | 25.80 | 33.00 |
| Pfizer | 31.30 | 23.00 |
| Schering | .90 | .50 |
As you can see, the results vary across the listing by rather wide variances. These numbers do not tell the entire story but they fend off the assertion in regard to 100% profit margins and 100% returns on equity. They do not address the amount of dollars required to bring to fruition a new promising drug nor the amount of research that is unproductive and must simply be written off. It is easy to attack the highly visibly pharmaceutical industry but how many consumers and patients step forward to thank these companies once in a while for saving or extending their lives?
Gary E. Marsella