Healthy Skepticism Library item: 15426

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Han J.
Drug Makers Spend 40% of Revenue on Promotion
The Korea Times 2009 Apr 13
http://www.koreatimes.co.kr/www/news/biz/2009/04/123_43106.html

Full text:

Next time you buy a prescription drug at a pharmacy, consider this disturbing fact: About half the price you pay goes toward entertaining doctors with golf outings, free lunches and dinners, drinking orgies and gift certificates.

Details of drug company spending revealed Monday show that the country’s top pharmaceutical companies on average spend 40 percent of their annual revenue on marketing and hospitality.

In its 2008 Medicine Industry Report, the Korea Health Industry Development Institute said 120 domestic drug makers dished out a total of 4.173 trillion won over a one-year period in order to boost sales.

This is a disproportionately high amount, considering that Korean companies only spare about 5 to 10 percent of their annual revenue ― much less than the 20 percent overseas pharmaceutical firms spend ― on research and developing new medicine.

The report comes at a time when the country’s antitrust watchdog has issued numerous warnings that it would crack down on excessive marketing and rebate offerings to hospitals. Local firms have long been scrutinized for overspending on bribing doctors to prescribe their generic copies of foreign blockbuster drugs while spending too little on investing in unique research.

Among the top 20 makers, Hanmi Pharmaceutical, the leader in the generic drug market and the first to sell the generic version of Lipitor, turned out to be the biggest spender on entertainment functions.

The report showed that the company spent 50.9 percent of its annual sales on marketing and sales activities.

Samjin Pharmaceutical came in second by spending 50.7 percent of its revenue; followed by Dong-A Pharma, which spent 49.3 percent; Chong Kun Dang Pharm (48.9 percent); Ildong Pharmaceutical (46.5 percent); LG Life Sciences (45.4 percent) and Boryung Pharmaceutical (43.3 percent).

Industry insiders say that most of the so-called educational and marketing functions are designed to entertain doctors who have the power to choose drugs for their patients.

``Doctors tend to make prescriptions based on their personal ties with drug makers,’‘ said one executive of a top 10 pharmaceutical company. He said generics are pretty much the same in efficacy, so, in the end, the competition comes down to who can lobby better.