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March 3, 2020JAMAOpen Access

Profitability of Large Pharmaceutical Companies Compared With Other Large Public Companies

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Cross-sectional study compares profitability measures of pharmaceutical and S&P 500 companies, indicating significant disparities.

This study aims to compare the profitability of large pharmaceutical companies with other large public companies.
Cross-sectional analysis of annual profits of 35 pharmaceutical companies and 357 S&P 500 companies from 2000 to 2018.
Profit measures analyzed included gross profit, EBITDA, and net income.
Utilized bivariable regression models to evaluate differences in profit margins.
Pharmaceutical companies showed greater median annual profit margins in all categories: gross profit margin 76.5% vs. 37.4%; EBITDA margin 29.4% vs. 19%; net income margin 13.8% vs. 7.7%; all P < .001.
Cumulative revenues: pharmaceutical companies at $11.5 trillion vs. $130.5 trillion for S&P 500 companies.
Differences in profit margins were less pronounced when controlling for company size and R&D expenses.

Ledley et al. (2020) studied this question.

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