You're not comparing the same numbers as Lowe did. So first thing, I was just summarizing what Derek Lowe wrote in 2013. If you click through, what he's comparing is SG&A to R&D. Quoting his post:
We're talking SG&A, "sales, general, and administrative". That's the accounting category where all advertising, promotion and marketing ends up. Executive salaries go there, too, in case you're wondering. Interestingly, R&D expenses technically go there as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A". What most companies don't do is break out the S part separately: just how much they spend on marketing (and how, and where) is considering more information than they're willing to share with the world, and with their competition.
That means that when you see people talking about how Big Pharma spends X zillion dollars on marketing, you're almost certainly seeing an argument based on the whole SG&A number. Anything past that is a guess - and would turn out to be a lower number than the SG&A, anyway, which has some other stuff rolled into it. Most of the people who talk about Pharma's marketing expenditures are not interested in lower numbers, anyway, from what I can see. So we'll use SG&A, because that's what we've got.
What he found is that SG&A spending was about twice R&D spending in 2013, then compared that ratio (2x) to large tech companies where the ratio was even worse (up to 8x).
For the pharma companies, SG&A was about 30% of revenue while R&D was anywhere from 12.5%-25% of revenue. (See his post I linked for the exact numbers he used.)
Now, looking at your CBO report, one thing I note is this tidbit:
The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000.
So R&D spending as a percent of revenue has increased to 25% industry wide since Lowe's post where it seemed to be a bit lower.
Search for SG&A spending in the pharma industry, I ended up like you did at statista:
The range is 38%-52%. So SG&A spending (50% of revenue) is still about 2x R&D spending (25% of revenue), with the numbers being a bit better than when Lowe wrote his post in 2013.
Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know. I was just going by what Lowe wrote since he works in the pharma industry and is a well-respected name on this site.
> Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know.
It is not. SG&E [1] includes a lot of things, including all labor costs (all the salaries for all the employees) and all rent.
As an example, Novo Nordisk, the maker of Ozempic, has annual operating expenses of about $20 billion and in 2023 launched an advertising campaign for Ozempic/Wegovy of a bit less than $0.5 billion/year.
> SG&E [1] includes a lot of things, including all labor costs (all the salaries for all the employees)
Lowe addresses that: Interestingly, R&D expenses technically go there [SG&A] as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A"
We're talking SG&A, "sales, general, and administrative". That's the accounting category where all advertising, promotion and marketing ends up. Executive salaries go there, too, in case you're wondering. Interestingly, R&D expenses technically go there as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A". What most companies don't do is break out the S part separately: just how much they spend on marketing (and how, and where) is considering more information than they're willing to share with the world, and with their competition.
That means that when you see people talking about how Big Pharma spends X zillion dollars on marketing, you're almost certainly seeing an argument based on the whole SG&A number. Anything past that is a guess - and would turn out to be a lower number than the SG&A, anyway, which has some other stuff rolled into it. Most of the people who talk about Pharma's marketing expenditures are not interested in lower numbers, anyway, from what I can see. So we'll use SG&A, because that's what we've got.
What he found is that SG&A spending was about twice R&D spending in 2013, then compared that ratio (2x) to large tech companies where the ratio was even worse (up to 8x).
For the pharma companies, SG&A was about 30% of revenue while R&D was anywhere from 12.5%-25% of revenue. (See his post I linked for the exact numbers he used.)
Now, looking at your CBO report, one thing I note is this tidbit:
The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000.
So R&D spending as a percent of revenue has increased to 25% industry wide since Lowe's post where it seemed to be a bit lower.
Search for SG&A spending in the pharma industry, I ended up like you did at statista:
https://www.statista.com/statistics/266321/sganda-to-sales-r...
The range is 38%-52%. So SG&A spending (50% of revenue) is still about 2x R&D spending (25% of revenue), with the numbers being a bit better than when Lowe wrote his post in 2013.
Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know. I was just going by what Lowe wrote since he works in the pharma industry and is a well-respected name on this site.