What percentage of industry revenue is spent on R&D? How much is spent on marketing and advertising?
Uwe Reinhardt, an economist who studies the U.S. health system, says that R&D accounts for about 13 percent of pharmaceutical companies’ revenue. Twenty-eight percent, he says, is spent on manufacturing, packaging and quality control, and 13 to 15 percent on administration and marketing. Since companies are not compelled to make public a breakdown of their marketing and advertising costs (almost all companies combine administration and marketing costs), it’s hard to pinpoint a figure for marketing expenditures. Industry spokesperson Marjorie Powell estimates that drug companies spent twice as much on R&D as on ads and marketing — roughly $15 billion in 2002 on advertising and marketing, and about $30 billion on R&D. However, industry critic Marcia Angell reverses that ratio, estimating that the industry spends about twice as much on marketing as they do on research. She tells FRONTLINE, “by their own figures, over a third of their employees are in marketing. Not marketing administrati
