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Pharmaceuticals again ranked as the most profitable sector in the United States, topping the annual Fortune 500 ranking of America's top industries, released this month.
The pharmaceutical industry topped all three of Fortune magazine's measures of profitability for 2001, making this decade the third in which the industry has been at or near the top in all the magazine's measures of profitability.
The occasion was seized by critics of the industry as reflecting corporate greed. Frank Clemente, director of Public Citizen's Congress Watch, said: "During a year in which there was much talk of sacrifice in the national interest, drug companies increased their astounding profits by hiking prescription prices, advertising some medicines more than Nike shoes, and successfully lobbying for lucrative monopoly patent extensions. Sometimes what's best for shareholders and chief executive officers isn't what's best for all Americans, particularly senior citizens who lack insurance cover for prescription drugs."
Overall profits of Fortune 500 companies declined by 53% in 2001, while the
top 10 US drug makers increased profits by 32% from $28bn (£20bn;
31bn) to $37bn, according to Public Citizen's
analysis of the Fortune 500 data. Together the 10 drug companies in
the list had the greatest return on revenues, reporting a profit of
18.5 cents for every dollar of sales, eight times higher than the
median for all Fortune 500 industries, which was 2.2 cents.
The drugs industry says it needs extraordinary profits to fund risky research
and development of new drugs and to absorb the high cost of drug
failures in clinical trials. The industry's output of new drugs has
risen only modestly in the past two decades, despite a more than
sixfold increase, after adjustment for inflation, in spending on
research and development
to
more than $30bn a year. In the past few years output has actually
declined. Many industry supporters blame tougher scrutiny by the Food
and Drug Administration.
The time spent to develop a drug, not counting the months consumed by
government review, has lengthened from about nine years in the 1980s
to more than 11 years, according to the Tufts Center for the Study of
Drug Development, and the cost has more than doubled, after
adjustment for inflation, to $800m. Public Citizen notes that the
Tufts Center gets money from drug companies and maintains that the
centre's figures are inflated to justify high drug costs.
Footnotes
A copy of Public Citizen's report is available at its website (www.citizen.org).
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