posted
Does anyone have a breakdown of, say Pfizer's annual report, with each section of spending separated out so we can look at it objectively?
I hear people say all the time that sales and marketing take up most of their budget - I'm not going to deny that I'm just curious to see the actual numbers. For example, what's included in sales and marketing costs? Is it strictly salary and benefits for salespeople and marketing literature and advertising?
Edit: I should add I'm not asking people to do legwork I can do - I've already looked at the annual report on Pfizer's website, and it does include information about incomes and R&D but I can't find in it the amount spent on sales and marketing costs. Maybe I've just missed it, it's a very long report. I just wondered if there was somewhere else with all this stuff broken down - when people say "Drug companies spend more on sales and marketing than on R&D" where are they getting that information?
[ May 04, 2005, 03:52 PM: Message edited by: Belle ]
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quote:Advertising expenses relating to production costs are expensed as incurred and costs of radio time, television time and space in publications are expensed when the related advertising occurs. Advertising expenses totaled approximately $3,490 million in 2004, $2,936 million in 2003 and $2,298 million in 2002.
In those three years, R&D expenses were $7,684 million, $7,487 million, and $5,208 million, respectively. "Cost of sales" was $7,541 million, $9,589 million, and $4,014 million over the three years.
Advertising is part of the "selling, informational, and administrative expenses" section of the breakdown. The totals for that section were $16,903 million, $15,108 million, and $10,829 million, respectively.
So the bottom line is that as far as I can tell it depends on the finer breakdown of that secion. We know how much of it is direct-to-consumer advertising but at the moment I'm not clear on what the rest of the section includes.
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posted
Twinky, when you said "the government eats it" (or something like that)I thought you were implying that the money was not coming out of your pocket. I see from your response that that is not the case. I hereby withdraw my sarcastic remark. Posts: 127 | Registered: Feb 2005
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posted
Why can't we fix the problem with Social Security?
As Mark Twain once said "It's difficult to predict, especially the future"
quote:But...isn't this about math? Shouldn't there be just one answer? How/why are there so many different opinions on when Social Security will fail?
The idea that because math is involved, there is only one answer is a common fallacy. Many mathematical problems have multiple solutions, but even that is not the central problem. In order to predict what will happen with Social Security in the future you need to know alot of things about the future. For example, you need to know how long on the average people will live after they retire. You need to know how birth rates will change, the average age of people when they enter the work force, rates at which people will become disabled or widowed. You need to know how earnings on the Social Security reserve will compare to overall economic growth. And you need to know exactly how these things will vary with time. We don't actually know any of those things so economists have to make educated guesses about dozens of variables before they can even start the mathematical models. Given all the uncertainties, its possible for people to manipulate the models to give an answer that is favorable to their political agenda. I find it curious that none of these groups ever detail the assumptions in their models (at least not in the public debates). It would be much easier to make understand the numbers if groups would say "assuming that the average life expectancy in 2040 is 90, Social Security will be solvent until 2050 but if the average life expectancy rises to 95, Social Security will only be solvent until 2045. I suspect that the differences are caused by much more subtle differences, but still It would be good to know what assumptions are being used in these projections
The best we seem to be able to say is that Social Security will be solvent for something between 40 and 60 years into the future. That still along ways off which is why the predictions are so uncertain.
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posted
The second part of my answer gets a bit more esoteric.
We can't solve the Social Security problem because we aren't being entirely honest about the nature of the problem. The Bush administration states the future deficit in Social Security as the motivation for creating private accounts even though private accounts will unquestionable increase the future deficit. The mostly unspoken problem with social security is that it has a relatively poor yield when compared with other pension funds. When I look the anticipated pay out for my University pension plan (TIAA-CREF) verses the anticipated pay out for Social Security, I'm getting alot more bang for my buck out of TIAA-CREF. But of course, SS is alot safer and considering how many corporate pensions funds have gone bankrupt over the past decade, safety is not a bad attribute.
I don't know all the reasons that SS performs so poorly. Part of the problem is that SS acts not only as a pension plan but also in many respects as a life insurance policy and a long term disability plan. We expect alot more from SS which is one reason it has lower returns. One possible way to reform SS is to compare it to many of the State pension funds that out perform SS and determine whether SS can be managed to yeild a higher return without turning to high risk investiment strategies. I haven't heard anyone discuss this option in any detail.
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posted
One last dirty little problem with SS is that the government has been borrowing from the SS fund to cover deficits in the Federal Budget. So while SS is solvent on the books for at least 40 years, the Feds will have to pay off the loans much sooner than that. In other words, our elected officials have been raiding our pension plan. As soon as the SS surplus decreases below some level, the dung is going to hit the proverbial fan and politicians are going to have deal with the reckless fiscal policies that have characterized the last 3 republican administrations.
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posted
SocialSecurity performs quite well. The mistake is in comparing it to pension plans. It isn't one. It is a direct payment from the current generation to the past generation for the capital improvements they have made to the nation.
The "SocialSecurity is a pension fund" is pure hogwash generated by "conservative"s and championed by Reagan to raise taxes on workers while decreasing taxes on the parasitic class: inheritors, trustfund babies, and those who conduct their financial affairs.
quote:while decreasing taxes on the parasitic class: inheritors, trustfund babies, and those who conduct their financial affairs.
Why would you consider those who conduct the financial affairs of the wealthy parasites? Why are those that inherit wealth parasites? Would you consider someone who lives on a welfare check a parasite? Just wondering.
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posted
I'm saying that an argument about how much is reasonable to charge or how what restrictions there should be is fine, I agree, but I don't see why we should question the motives of those who go into a life saving buisness, or why it even matters. If they save my life I don't care if they did it to impress their boyfriend, my life is saved.
posted
Well, how about a sort of inversely analogous case: does intent matter in a murder? I'm sure it matters to both of us. So then to me, intent matters in all cases, whereas to you it doesn't matter in at least one case (that of a person choosing a life-saving profession). That's fine, but it doesn't make my view at all unreasonable.
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quote: The high prices aren't so much something of our own invention as they are created by those countries that heavily regulate their prices.
Note: Canadian prices are (generally) set by taking the median cost of the drug in other developed countries with the stipulation that no drug may cost more than a current drug on the market that does the same thing. It’s not like we pull numbers out of a hat and declare that to be the price.
That aside, the notion that Americans are subsidising lower costs in other countries seems foolish to me. If the drug companies were not making ample money by selling these drugs to other countries even at the lowered prices they simply wouldn’t do it. That the American market will support a higher market price is not the fault of Canada, England, or any other country with price controls.
quote: The problem is corporate culture. A company like Pfizer isn't going to decrease their bottom line because of drug price regulation. They will just focus more on areas that are guaranteed to make a profit, and research will suffer.
This, of course, is already happening. There is a reason that the vast majority of drugs released are “me too” drugs that don’t really do anything new and there is little to no work in developing cures over treatments (ie: Look at the decline of penicillin-type drugs in development now (I believe it is 2) vs. how many were in development 10 years ago (I believe around 100). It’s long, hard, costly, and you only reap profits for a week or two. There’s no money in that. Or look at the global decrease in the development and manufacture of vaccines.)
quote: What Research&Development that drug companies actually do are: Clinical(secondary)trials specificly for FDA approval; R&D of manufacturing processes; R&D on isomeric forms of the drug for easier manufacturing&purification -- eg adding three peptides to BGH so the hormone doesn't tangle&clump and clog the filters -- and to either get around someone else's monopoly or to maintain the profitability of their own monopoly; And repackaging their drug -- eg putting it into a 24-hour capsule -- to maintain their monopoly beyond the years provided by the law for the original patent.
Quoted here because aspectre is very much correct. I believe I’m the only person here who has designed drugs both for Big PharmaTM and for Government Funded UniversityTM. The kind of work most people envision as “R&D” simply isn’t being done by large companies. It’s too risky. Better to take something you already have a patent on, repackage it, and get another patent. Or take two drugs already on the market and package them together, work like that. This is not to say that no real innovation is occurring, but it doesn’t take a genius to look through publications and see how few are by drug companies, or look at who’s presenting at conferences. Granted that’s a somewhat skewed perception as many drug companies won’t let you publish because it can only harm their interests, but it’s all a layperson has.
quote: Sell drugs to a foreign country, and they don't have to worry about paying top dollar for temperature controlled warehouses with the right amount of security and tracking procedures in case there is a recall. You do have to do those things in the US. By the time the drug reaches the retail market, that regulatory cost has to be passed along.
Yikes! What country were you selling to? It sure as heck wasn’t a first world one, I can assure you that. Tracking, temperature control, these are all a matter of course in shipping run-of-the-mill chemicals, let alone something that’s going to wind up in the human body. Which is not to say that the FDA doesn’t make things expensive, but it’s not for these reasons. I think there are two primary reasons why the American system is more expensive: The staff required to keep track of all these regulations and which myriad of forms has to be signed by who, etc. (I remember working on an NDA; it was nuts.) And the extra tests that the FDA requires, both the cost of test and the money lost by not having the drug on the market while you do them. There are certain trials that are required by the US that aren’t required by other countries so it’s not unusual for an American country to have their drug released in the US years after its European release, for example.
quote: It had three people in it. To handle everything internationally, all sales, all marketing, all regulatory issues. In contrast, our in-house domestic sales regulatory department had six people on staff. Our marketing staff was only five people, so regulatory trumped marketing.
This is something of a misrepresentation, Belle. The US is also by far and away the largest market for pharmaceuticals. The sheer volume of orders will require more staff; regardless of how complicated the shipping.
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