What does big pharma do with its money? For starters, pharmaceutical marketing gets most of it. After all, advertising and TV spots for all those direct sales "Ask your doctor" ads don't come cheap.
It hires lobbyists; they do some R&D; they market; they pay dividends; they hire lawyers, lots of lawyers; they market; and they contribute to politician's campaigns.
They fund independent research; they fund medical schools; they market; they hire doctors to give lectures; they employ people and they pay bonuses to their execs.
Did I mention that they do some pharmaceutical marketing?
They also pay salaries. The 2008 top ten employed 782,639 people, a very sizeable payroll by anyone's measure. Such is the world of the pharmaceutical industry.
The pharmaceutical industry makes money and holds a lot money but it is pharmaceutical marketing that primes the pump.
Those top ten drug companies in the table on a previous page brought in $98,662,000,000 (that's $98.6 billion) in cash from operating activities in 2008 and together they only account for a little over half of the market.
To learn about the tools, techniques and ins-and-outs of healthcare marketing, click on the book cover to the right. It will take you to Amazon.com where you can review the book and purchase it if that happens to be your field.
All that pharmaceutical marketing generates big sales which translate to huge profit margins and the marketing machine is not going to let anything bring it down.
Do they want to create drugs that will actually cure something? Not on your life! The grand objective is to control symptoms and keep people taking their pills for life.
Marketing is the secret to filling your medicine cabinet, not curing diseases. All those groups racing around trying to raise money for this or that cure should redirect their energy. Put it on prevention, that is where the answer lies.
If they pin their hopes on the pharmaceutical industry all they are going to get is more pharmaceutical marketing, not cures. Look at what they spend on marketing versus research.
The top ten companies we named, invest $42 billion a year on research which comes out to about 14% of sales. That sounds like a lot of money but it's only half of what they spend on marketing and administration. Right!
Over $84 billion on promotion! If they don't have a pill for a disease, they will invent a disease for the pills they have...or worse, go to what's called "off-label" marketing.
Off-label is where the medicine cabinet pushes their drugs for unproven and unapproved uses.
Those gentle folks at Johnson & Johnson that brought us Band Aids and baby shampoo got nailed hard for off-label marketing when their Scios division started pushing its Natrecor heart drug for weekly tune-ups.
The only problem was that Natrecor was only approved for a one-time use to relieve symptoms associated with severe, acute heart failure.
The dangerous and unapproved use as a weekly tune up was pushed on financial grounds. They proposed setting up Natrecor as a profit center since Medicare would pay doctors $600 per visit plus the cost of the drug. Not a bad transition from a one-time $600 charge to a $31,200 annual income.
Who do they market to? You...and the doctors and hospitals! Over 80% of all promotional spending is to the professional community. That would be ads in professional journals, sales reps calling on hospitals and doctor's offices, and free drug samples.
About those drug reps; called detail people, according to a May 8, 2006 issue of Forbes, pharmaceutical companies tripled the numbers of detail people calling on docs over the last ten years. Ten years ago, there was one sales person for every 18 doctors, now there is one sales rep for every nine docs.
Free samples to the docs is no trivial amount. In 2002, the retail value of free drug samples going to the docs medicine cabinet was $12 billion, making it the largest component of professional marketing.
Nevertheless, in spite of all that spent money and free samples, big pharma still has a lot to learn about marketing and could take some lessons from little pharma or even Google.
What if two different researchers in a company came up with a new diabetes drug and they go to the budget committee for funding.
The first drug will sell for $100 per pill and will cure diabetes with just one dose; that's it, no more pills for life, no more diabetes.
The second will only cost $1 per pill and won't cure diabetes but will control blood sugar and all the diabetic symptoms, but the patient will have to take one pill a day for life. Which one is going to get the funding?
In the next page, we follow the pharmaceutical marketing machine to the dark side and see how they use those huge coffers to buy influence and corrupt public officials, lawmakers and the courts through lobbyists.
Leave Pharmaceutical Marketing and return to U.S. Healthcare
Return to the Drug Industry introduction page
Return to the Drug Profit Margin page
Navigate to Drug Industry Influence Peddling; the Lobbyists
Navigate to Generic Drugs
Navigate to Getting Off Prescription Drugs
Visit the Site Mall for products to help us avoid the drug industry
Return to Home Page