[Octoth0rpe]

That is accounted for here:

> Let’s 4x that to include the cost of drugs that never go to market.

Also, that's a hugely generous multiplier. IANA pharma marketer, but I'm fairly confident that if a drug is ultimately unsuccessful, it's cut off long before the 3b mark. Not saying that the investment isn't substantial, but it's not like they have millions of doses produced/distributed before they discover that it's ineffective.

[ericd]

I really don't think that's a generous multiplier, at all. I'm pretty sure it's not manufacturing doses that's costly, it's probably nearly free on a marginal cost basis, the costly part is trying a huge number of options, getting all the way to testing on them, and then it not panning out, and paying the researchers who are doing that all the while.

Another comment nailed it, this is a power law return market, like startup investing. Those very few 100-1000x returns pay for everything else. You can't look at one of the most successful drugs and the costs of making it and decide that they should get a 50% return on top of that, it needs to cover a huge number of failures.

[Ferret7446]

Not only is medical research extremely risky in that you fail to develop a drug, you also have to take into account the risk if something goes wrong and you injure people.

IMO, the multiplier would be at least 10x, though I'd love to hear from an industry expert.