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Drug Companies are the Most Profitable Industry

In a year that saw a drop in employment rates, a plunge in the stock market and symbols of America's economy literally come crashing down, the pharmaceutical industry continued its reign as the most profitable industry in the annual Fortune 500 list.

While the overall profits of Fortune 500 companies declined by 53 percent - the second deepest dive in profits the Fortune 500 has taken in its 47 years 1 - the top 10 U.S. drug makers increased profits by 33 percent.

Collectively, the 10 drug companies in the Fortune 500 topped all three of the magazine's measures of profitability in 2001, according to Fortune magazine's annual analysis of America's largest companies.

These companies had the greatest return on revenues, reporting a profit of 18.5 cents for every $1 of sales, which was eight times higher than the media for all Fortune 500 industries and easily more than the next most profitable industry, commercial banking (13.5 percent return on revenue).

The drug industry also dominated others by realizing a return on assets of 16.5 percent - almost six times the median (2.5 percent) posted by all industries. Pharmaceutical companies completed the sweep with a return on shareholders' equity (33.2 percent) that was more than three times the median of all Fortune 500 industries (9.8 percent).

Fortune 500 drug companies attained this triple crown, in part, by hiking pill prices, advertising some medicines more than Nike shoes and spending much less than the industry has suggested on R&D.8

In addition, through its huge lobbying presence in Washington, D.C. the drug industry staved off congressional efforts to moderate rising drug prices. In fact, the industry went on the offensive last year in Congress, fighting for lucrative extensions of monopoly patents on drugs like Cipro, the antibiotic used to treat anthrax. Congress was all too willing to help, as it approved a patent extension program for pediatric drugs that will give drug companies $592 million a year in added profits, according to the US Food and Drug Administration (FDA). The FDA acknowledges that this is a conservative estimate based on a limited sample of drugs. Public Citizen has identified 15 drugs that alone could net an additional $2 billion in profits from the six-month patent extensions. Public Citizen April 18, 2002

DR. MERCOLA'S COMMENT:

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In case you haven't figured it out by now, the major reason for the traditional paradigm is the influence of the most powerful industry in the US, the drug companies.

They have a major influence on the majority of studies published and nearly all of medical education. This influence is what causes physicians to use their expensive symptomatic band-aids as solutions for people's problems.

As you can see from the graph I inserted, a large part of the reason the drug companies have been able to get away with their high prices is that the vast majority of people do not pay for their medications anymore. Insurance companies are picking up the tab.

Since most people are not paying for it directly they are able to get away with charging outrageous prices.

Admittedly, it will be a tough battle. But I am firmly convinced that the drug companies can be defeated and the average consumer can be educated to wake up to the truth about how they can improve their health.

Intuitively nearly everyone realizes that using a drug is rarely solving the problem as its foundational cause.

With time, your help and the Internet I believe the transformation of the traditional paradigm will be complete.

The system is desperately broken and in need of a change. We cannot spend over one trillion dollars for health care just to improve profits for drug companies. We have the capital to more than adequately treat nearly all people. It is just a matter of shifting our priorities and perspectives.

Related Articles:

The Pharmaceutical Industry -- To Whom Is It Accountable?

USA Today Exposes Conflicts of Interest in FDA Drug Approvals

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