Importance: Understanding the profitability of pharmaceutical companies is essential to formulating evidence-based policies to reduce drug costs while maintaining the industry's ability to innovate and provide essential medicines. Objective: To compare the profitability of large pharmaceutical companies with other large companies. Design, Setting, and Participants: This cross-sectional study compared the annual profits of 35 large pharmaceutical companies with 357 companies in the S earnings before interest, taxes, depreciation, and amortization (EBITDA; pretax profit from core business activities) ; and net income, also referred to as earnings (difference between all revenues and expenses). Profit measures are described as cumulative for all companies from 2000 to 2018 or annual profit as a fraction of revenue (margin). Results: From 2000 to 2018, 35 large pharmaceutical companies reported cumulative revenue of 11. 5 trillion, gross profit of 8. 6 trillion, EBITDA of 3. 7 trillion, and net income of 1. 9 trillion, while 357 S difference, 39. 1% 95% CI, 32. 5%-45. 7%; P <. 001; EBITDA margin: 29. 4% vs 19%; difference, 10. 4% 95% CI, 7. 1%-13. 7%; P <. 001; net income margin: 13. 8% vs 7. 7%; difference, 6. 1% 95% CI, 2. 5%-9. 7%; P <. 001). The differences were smaller in regression models controlling for company size and year and when considering only companies reporting research and development expense (gross profit margin: difference, 30. 5% 95% CI, 20. 9%-40. 1%; P <. 001; EBITDA margin: difference, 9. 2% 95% CI, 5. 2%-13. 2%; P <. 001; net income margin: difference, 3. 6% 95% CI, 0. 011%-7. 2%; P =. 05). Conclusions and Relevance: From 2000 to 2018, the profitability of large pharmaceutical companies was significantly greater than other large, public companies, but the difference was less pronounced when considering company size, year, or research and development expense. Data on the profitability of large pharmaceutical companies may be relevant to formulating evidence-based policies to make medicines more affordable.
Ledley et al. (Tue,) studied this question.