Report | October 2018
Prescription Drug Supply Chain Profitability
By Nam D. Pham, Ph.D.
When it comes to the topic of rising drug prices, critics often focus on the high profits of biopharmaceutical manufacturers, not the profitability of the supply chain. Although the profit margins of manufacturers seem higher than companies along the supply chain, a closer look reveals a very different conclusion. The profitability of PBMs is nearly two times greater than biopharmaceutical manufacturers and other companies along the supply chain. While drug manufacturers take enormous risks, including an average of $2.6 billion risk capital over a decade to develop just one new drug, PBMs, who take very little risk in comparison, reap the greatest reward.