On 5 Nov 2003, at 6:59 pm, Gautam Mukunda wrote:
--- The Fool <[EMAIL PROTECTED]> wrote:Lilly lost most of its Prozac market share in_weeks_
Most likely because of price. You can't tell me that a company given a 17 year monopoly can't make a drug just as cheaply as a newcomer.
It can. But it can't make them _any cheaper_ than a newcomer could. There are hundreds of generic manufacturers. So Lilly could get, say, one half of one percent of the market with its new drug. When it spend _$1BB_ to get that drug to market.
Even worse from a drug company's perspective, pharmaceuticals are an almost classic Ec. 101 product. Very low barriers to entry, and drugs made by different companies are indistinguishable. So what happens? The product will be sold very near to the marginal cost of production. In the case of drugs, the MC of production is _extremely_ low. And, in fact, generic manufacturers are far less profitable than the creators of new drugs.So your saying almost the entire cost of making a drug is the FDA approval process w/ clinical trial? Sound like something the government should be funding to me.
Yes, this is well known. The _second pill_ costs a few cents. The first pill costs a billion dollars.
I don't know much about economics so feel free to educate me, but isn't a big chunk of the wealth of 'Western Industrialized' countries (USA, Europe, Japan) actually IP ? Levis, Nike, Coke, Raybans is all stuff that costs very little to make (and is made in countries with cheap labour if possible) but has a high value because of IP. 'Fakes' are illegal, even if those 'fakes' came out the back door of the same factory that makes the 'real' product.
A Sony TV or Walkman has a premium price because it was designed in Japan and has the brand name even though it may be built in Mexico or Korea.
Apple computers (and other brands of course) are 'designed in California' but built by Samsung, LG, and various oddly-named Taiwanese contractors who bid to get the work.
If it wasn't for IP they could ship Powerbooks out the back door for half the price and Apple would be losing money on the 0.5 $billion they spend on R&D annually.
Or the Chinese company that copied Cisco's routers right down to the manuals, and then made the mistake of trying to sell them in the USA...
-- William T Goodall Mail : [EMAIL PROTECTED] Web : http://www.wtgab.demon.co.uk Blog : http://radio.weblogs.com/0111221/
Beware of bugs in the above code; I have only proved it correct, not tried it. -- Donald E. Knuth
-- William T Goodall Mail : [EMAIL PROTECTED] Web : http://www.wtgab.demon.co.uk Blog : http://radio.weblogs.com/0111221/
"The fact that an opinion has been widely held is no evidence whatever that it is not utterly absurd; indeed in view of the silliness of the majority of mankind, a widespread belief is more likely to be foolish than sensible."
- Bertrand Russell
_______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
