Industrial profitability

Over the years innovations in aircraft have given rise to more new plastic developments and have kept the plastics industry profits at a higher level than any other major market principally since they can meet different environmental and load conditions. Virtually all plastics have received the benefit of the aircraft industry s uplifting influence. Practically all conceivable top quality plastics are used to provide cost advantages and improvements... 

The research chemist both in academia and in industry profits from the application of metrics such as mass index (equation (5.1)), environmental factor (equation (5.2)) and cost index (equation (5.3)). Therefore, one purpose of this chapter is to demonstrate how to apply such metrics and what kind of information can be obtained from them. Some of their potential application areas are indicated in Box 5.1. 

Disconnection between high industry profits and R D spending. For years, the industry s explanation for its prices and profits related to having sufficient money to carry out new research, as well as sufficient profits to reward the inherent risks. Recent revelations that many companies spend more on promotion than on R D, combined with the decline in the number of major new therapies, has made people skeptical of this claim. Even those who agree with it indicate to pollsters that they feel Americans are paying more than their fair share for the cost of drug development. 

In December 1983, the then Health Minister announced measures to cut industry profits and reduce the NHS medicines bill, then running at 1.3 billion per year, by 100 million. In November 1984, further measures were taken by reducing the ROC allowed under the PPRS from 25% to a range of 15-17%. ROC was raised to... 

Prescription drugs have many complex characteristics, which, when taken together, have led to major controversies in public policy arenas, including pricing, patents, and incentives for research and development, as well as excess industry profits. Each characteristic is not unique to pharmaceuticals, but rather it is the characteristics, taken in combination, that make the industry unique. 

From 1995 to 2002, pharmaceutical manufacturers were the nation s most profitable industry (profits as a percent of revenues). They ranked third in profitability in 2003 and 2004, 5th in 2005, 2nd in 2006, and 3rd in 2007, with profits of 15.8% compared to 5.7% for all Fortune 500 firms in 2007.30... 

Henry A. Waxman. Pharmaceutical Industry Profits Increase by Over 8 Billion after Medicare Drug Plan Goes into Effect, Committee on Government Reform. Available online. URL http //oversight.house.gov/documents/20060919115623 70677.pdf. Posted September 2006. 

Industry profits are indeed high related to those found in other sectors, notably service (retail and wholesaler) industries. This is due in part to the fact that the pharmaceutical industry is asset-intensive rather than labor-intensive, which leads to a low asset-to-sales turnover ratio, which in turn leads to a high rate of return on equity. Conversely, sectors with low asset-to-sales turnover ratios will have low rates of return on equity. 

Profits No profits Some profitable companies Overall industry profitable... 

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