What about the dozens to hundreds of drugs that fail the tests for a variety of reasons and at different stages of the process?
The few drugs that do pan out MUST pay the costs of all the failures, plus produce a profit for the company. Or it won't be in business long to produce more wonderful new drugs.
Unless I'm quite confused I don't see drug companies reporting 50% to 80% profits.
The average profit margin of the pharmaceutical companies in the Fortune 1000 list is 16% (profits as a percent of revenue). This is in line with the profit margins of the banking (13%), diversified financial (11%), tobacco (11%), and real estate (10%) industries (Fortune, 2002)1 . None of these industries has the need to pour money back into research that the pharmaceutical industry does.
This is from 10 years ago. Though I suspect they aren't much different now.
Apple profits are over 40%. Isn't a new drug that saves lives worth something vaguely resembling the rewards for a new iPad?
Drugs are much cheaper in other countries. Mexico is known for cheap drugs. How much cheaper are drugs there?