[barry-cotter]

If your model of the pharmaceutical industry were true they would have very, very high profit margins. They don’t. Privatised profit and socialised losses is a great way of making an individual profit but the pharmaceutical industry is not politically connected enough to do that.

https://www.forbes.com/sites/johnlamattina/2018/01/23/about-...

> The average return on equity for key industries from 2014 – 2016 shows that biopharma’s profits stand at 16.2%, significantly lower than Computer Sciences (31.6%), Beverages (27.4%), Aerospace/Defense (23.0%), and Trucking (19.1%) while modestly higher than Software System/Applications (15.2%) and Healthcare Support Services (14.4%).

> Another measure, Internal Rate of Return (IRR) is even more telling. IRR calculates the sales/cash flows resulting from R&D investments, ties R&D and the returns it generates together, and is a more appropriate metric for biopharma productivity. Deloitte reports that the IRR for biopharma R&D has been steadily falling from 10.1% in 2010 to 3.2% in 2017. Even Wall Street hasn’t bought into the “pharma soaring profits” view. Since February 1, 2014, while the Dow has risen 63%, the stock prices of a number of major pharma companies have been muted with Pfizer and Bristol-Myers each growing by about 15%, and Merck and AstraZeneca by roughly 6.5%. Even Lilly’s growth of 43% still lags the Dow.

[astazangasta]

This is an industry that has had 15-20% returns for decades. I'm not sure what "computer sciences" is as an industry separate from the rest of software, but saying there are some sectors more profitable than pharma says not much. Pharma is huge as a fraction of GDP and consistently profitable because its profit is based on rents. If it is flagging in recent years it is because public sector spending on research is flagging and hasn't yielded as many cash cows as usual.