Big Pharma Spends More On Advertising Than Research

drug company
A drug company is a commercial business whose focus is to research, develop, market and/or distribute drugs, most commonly in the context of healthcare; from wikipedia. But according to a study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim.

But how could this be you might ask yourself. Well the answer is fairly easy; regardless of its purpose of helping people it is a bussiness and thus it has to make money and the way of making money is by advertising more and researching less. The researchers’ estimate is based on the systematic collection of data directly from the industry and doctors during 2004, which shows the U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion.

In case you are wondering who made this study well the research is co-authored by PhD candidate Marc-André Gagnon, who led the study and Joel Lexchin, a long-time researcher of pharmaceutical promotion, Toronto physician, and Associate Chair of York’s School of Health Policy & Management in the Faculty of Health.

“In our paper, we make the case for the need for a new estimate of promotional expenditures by the U.S. pharmaceutical industry,” says Gagnon. “We then explain how we used proprietary databases to construct a revised estimate and finally, we compare our results with those from other data sources to argue in favor of changing the priorities of the industry.”

[digg-me]This study is very important as it shows the most accurate image yet of the promotional workings of the pharmaceutical industry, says Lexchin. But even this could be wrong a bit because there are other advertising campaigns which could not be taken into consideration such as ghost-writing and off-label promotion so in fact these companies are probably spending more than twice advertising rather then researching. As well, note the authors, the number of meetings for promotional purposes has dramatically increased in the U.S. pharmaceutical industry, jumping from 120,000 in 1998 to 371,000 in 2004, further supporting their findings that the U.S. pharmaceutical industry is marketing-driven.

47 thoughts on “Big Pharma Spends More On Advertising Than Research

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  5. Owen Elicate

    You lost me at “bussiness” and “who made this study well the research”. Besides that the stats are interesting.

  6. greg

    24.4% on promotion
    13.4% on research and development
    What is the other 62.2% spent on?

    How did Marc-Andre Gagnon and Joel Lexichin define “promotion” and “R&D.”

    Was the cost of equipment and the salaries for the researchers included in the “R&D” cost?

    What percentage is spent on meeting government guideline and FDA related expenses?

    “…proprietary databases to construct a revised estimate and finally, we compare our results with those from other data sources…”

    If the databases were proprietary how did they get access to the information? If they had access to the proprietary databases, why is there a need for other data sources? What are these other data sources and how were they factored into the results?

    “…to argue in favor of changing the priorities of the industry.”

    Now the truth comes out. Marc-Andre Gagnon and Joel Lexichin performed this “study” with a goal in mind; the goal of showing drugs companies spend too much money on advertising.

    I guess it is too much to ask for people to simply seek the truth.

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  8. bill

    “Now the truth comes out. Marc-Andre Gagnon and Joel Lexichin performed this “study” with a goal in mind; the goal of showing drugs companies spend too much money on advertising.”
    Not necessarily. They did the study to find the proportional differences between the two expenditures. Their results would lead MOST people to draw that conclusion though. And I’d agree. Now go take your cialis and a little zyrtec and chill out. I’ve never been prescribed these, yet I know their names and I bet you do too… HMMM

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  14. tim

    like this is any big news…..all pharm companies spend 3-4 x as much on advertizing that research….typicallly 20 on research 40-60 percent on ads…

    use to work at a big pharm…..they care as much about your health as the cigarette companies, they are out to make money…go figure….

  15. kh

    @greg: “What is the other 62.2% spent on?”

    Probably patenting and law suits to protect their patents and administration which would include executive salaries.

  16. Лев

    Читал про это в Википедии. Вообще конечно интересная тема.

  17. Василий

    Нехорошее употребление материальных благ часто является вернейшим путем к величайшим невзгодам.

  18. WARLOCK

    Сравнительно недавно попал на Ваш блог, теперь каждое утро захожу глянуть, не написали ли чего новенького. :) К сожалению только Вы не каждый день Ваш блог обновляете :(

  19. Winner

    Я тоже также думал, пока не увидел пару аналогичных статей по этой же теме.

  20. BadBoy

    Я совершенно случайно зашел на этот сайт, но вот обосновался тут надолго. Задержался, потому что все очень интересно. Обязательно скажу о вас всем своим друзьям.

  21. Давыд

    Видел что-то наподобие в англоязычном интернете, в Русскоязычном интернете про такие вещи как-то не особо часто посты увидишь.

  22. Виталий Павленко

    Благодарю, что просветили, и, главное, как раз вовремя. Подумать только, шесть лет уже в инете, но про это первый раз слышу.

  23. JamesH

    Important to know the figures behind the development and promotion of drugs – due to the rocketing cost of development and governments worldwide squeezing profits and shortening exclusivity rights on the end products, pharma have to make as much as possible in an increasingly short time and competitve environment – a viscious cirlce. If we extend exclusivity then pharma could charge less and promote less and be more confidnet to invest in future research. Why does Paul McCartney get 50 years protection on the frog chorus and pharma get 5-10 years exclusivity on drugs that saves lives and costs $500M to get to market?

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