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Originally posted by jerZ07002 what happened to them and their system?

LOL! What happened to US and OUR system?!

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Originally posted by Shakka You do know what a profit is don't you? Or are you just being adversarial?

Profit is how much you make off selling a product compared to what you spent on it, therefore anything spent on R&D is calculated in the production costs, not the profit margin

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With money. How do you pay for therapy?

The same

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Originally posted by George Smiley Profit is how much you make off selling a product compared to what you spent on it, therefore anything spent on R&D is calculated in the production costs, not the profit margin

I don't follow. R&D is a cost of production, which comes out of your gross margin and directly affects profits. It may be amortized, but it is still a cost. This is precisely why so many drug development/pharmaceutical/biotech companies operate at substantial losses for years before they may ever actually report a profit. Big drug companies like Pfizer, Merck, etc. have profits that they can reinvest into new R&D, without which they would be significantly hindered from searching for novel new drugs and therapeutics. Maybe you do it differently on that side of the pond.

Last edited by Shakka on Nov-04-2008 at 15:31

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Originally posted by George Smiley LOL! What happened to US and OUR system?!

we haven't stopped producing the most advanced technological products, they have!

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Originally posted by Shakka I don't follow. R&D is a cost of production, which comes out of your gross margin and directly affects profits. It may be amortized, but it is still a cost. This is precisely why so many drug development/pharmaceutical/biotech companies operate at substantial losses for years before they may ever actually report a profit. Big drug companies like Pfizer, Merck, etc. have profits that they can reinvest into new R&D, without which they would be significantly hindered from searching for novel new drugs and therapeutics. Maybe you do it differently on that side of the pond.

Anything spent on R&D cannot be considered part of the profit, can it?

In fact you admit as such in the first half of your post before returning to your claim that R&D costs are part of the profit!

Make your mind up!

But back to my point (which I assume you've completely forgotten), in 2007, Pfizer made over $8bn profit (from a turnover of $40bn). In 2006 the whole industry in America made $40bn in 6 months, so we're looking at around $80bn of profit over a year. Imagine by how much the cost of drugs would come down to should that industry be nationalised? It would probably earn money for the government which could be used to increase services or lessen the tax burden (for everyone including well of people like yourself!)

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Originally posted by jerZ07002 we haven't stopped producing the most advanced technological products, they have!

Your point only works if I advocate nationalising all industries, I clearly don't advocate that so unfortunately your point is invalid. The fact is, Russia proved that a nationalised industry is more than capable of matching or bettering the same products from the private market...

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Originally posted by George Smiley Anything spent on R&D cannot be considered part of the profit, can it? In fact you admit as such in the first half of your post before returning to your claim that R&D costs are part of the profit! Make your mind up!

I don't understand what the fuck you're talking about. What did I admit? R&D are costs. Costs are not profit, they come out of profits. What is your point? There is gross profit and net profit. Gross profit = sales minus cost of good sold (which would include amortized R&D expenses). Therefore R&D costs ARE a part of the profit--they reduce it. Net profits would be what is left after interest expenses, depreciation of property/equipment/etc., amortization and taxes. i.e. Net Income. If you believe the accounting standards work so differently, please elaborate without one-liners that say next to nothing.

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But back to my point (which I assume you've completely forgotten), in 2007, Pfizer made over $8bn profit (from a turnover of $40bn). In 2006 the whole industry in America made $40bn in 6 months, so we're looking at around $80bn of profit over a year. Imagine by how much the cost of drugs would come down to should that industry be nationalised? It would probably earn money for the government which could be used to increase services or lessen the tax burden (for everyone including well of people like yourself!)

Ad homenim aside, you really are a smug little **** sometimes, aren't you?

According to data available to me, in 2007, PFE reported revenues of $48.61B and reported net income of nearly $12B ($2.18/share for their shareholders.) Maybe adjusted for currency and that's why your figures don't agree with mine, but I'm using the publicly filed financial statements. Currently, PFE pays out $1.28/share in dividends (profits returned to the shareholders) and the rest goes into retained earnings which can be used for future R&D and general business functions.

As to the rest of your comments, you are only exposing yourself as the big government socialist that thinks nationalising an industry somehow creates wealth, that bigger government is better, and that somehow the government is a more efficient allocator of resources than private industry. I don't share the same opinion.

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Originally posted by George Smiley Your point only works if I advocate nationalising all industries, I clearly don't advocate that so unfortunately your point is invalid. The fact is, Russia proved that a nationalised industry is more than capable of matching or bettering the same products from the private market...

i don't know about that. if certain industries are nationalized to the exclusion of others, the effects will still be present. Namely, the nationalization will still reduce the financial rewards of innovating in that industry, and the innovations will certainly slow down as science and engineering students study to become professionals in industries in which their hard work is rewarded more handsomely.

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Originally posted by jerZ07002 i don't know about that. if certain industries are nationalized to the exclusion of others, the effects will still be present. Namely, the nationalization will still reduce the financial rewards of innovating in that industry, and the innovations will certainly slow down as science and engineering students study to become professionals in industries in which their hard work is rewarded more handsomely.

What makes you think that staff wages will automatically be lowered under nationalisation? The most prestigious jobs, privatised or nationalised will always be the most well rewarded. I see that in my country where doctors' wages are paid for out of tax revenues, but they are the highest paid professionals as a whole. I see no reason why scientists would not also be extremely well compensated for their work

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Originally posted by Shakka I don't understand what the fuck you're talking about. What did I admit? R&D are costs. Costs are not profit, they come out of profits. What is your point? There is gross profit and net profit. Gross profit = sales minus cost of good sold (which would include amortized R&D expenses). Therefore R&D costs ARE a part of the profit--they reduce it. Net profits would be what is left after interest expenses, depreciation of property/equipment/etc., amortization and taxes. i.e. Net Income. If you believe the accounting standards work so differently, please elaborate without one-liners that say next to nothing.

I think we both know we're talking about net income, you're just trying to wriggle

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Ad homenim aside, you really are a smug little **** sometimes, aren't you?

A lot of the time in fact

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According to data available to me, in 2007, PFE reported revenues of $48.61B and reported net income of nearly $12B ($2.18/share for their shareholders.) Maybe adjusted for currency and that's why your figures don't agree with mine, but I'm using the publicly filed financial statements. Currently, PFE pays out $1.28/share in dividends (profits returned to the shareholders) and the rest goes into retained earnings which can be used for future R&D and general business functions.

The exact figures are not important, what is, and what my original point referred to, is that without having to produce profits or pay their shareholders off, their products would be cheaper

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As to the rest of your comments, you are only exposing yourself as the big government socialist that thinks nationalising an industry somehow creates wealth, that bigger government is better, and that somehow the government is a more efficient allocator of resources than private industry. I don't share the same opinion.

You say that like it's supposed to be some kind of insult

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Originally posted by George Smiley I think we both know we're talking about net income, you're just trying to wriggle

Wriggle around what? I still don't think you've made any sense. If I'm following you correctly, you're trying to argue that R&D expenses don't somehow impact profits. I have argued that they are a cost of development (though they get amortized over time) and are therefore a part of COGS. Whether talking about gross profit or net profit is irrelevant as the cost of R&D is one of the first things to come out of revenues and is included in both figures. Are you sure you know what you're talking about? If you do, I would really appreciate you elaborating and explaining exactly what your point is.

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The exact figures are not important, what is, and what my original point referred to, is that without having to produce profits or pay their shareholders off, their products would be cheaper

They are meeting a "need" are they not? The laws of supply and demand still exist. They are not somehow circumventing basic principles of economics.

[uote]You say that like it's supposed to be some kind of insult [/QUOTE]

Take it how you want. I'm just pointing it out.