Menu Close

Report  |  March 2023

Profitability of Biopharmaceutical Manufacturers and PBM/Health Insurance Conglomerates

By Nam D. Pham, Ph.D.

A typical distribution chain consists of manufacturers who create products, and distributors who purchase those products in bulk and sell smaller quantities to retailers, who then sell directly to consumers. Manufacturers, who risk capital to innovate and produce goods, generally expect to earn higher profits than distributors, who provide services moving those goods to consumers while assuming relatively little risk. However, that is not the case in the biopharmaceutical distribution chain, where manufacturers incur nearly all the risk, yet higher returns are obtained further down the chain.