I suspect that pharmaceutical firms don't top the list of Americans' favorite industries. When you or someone you care about is forking over thousands of dollars per year for necessary medications, it can be hard to muster many warm feelings. And when you know that certain drugs can be purchased for less in other nations, it can be doubly frustrating.
The industry offers plenty of explanations, and I appreciate the logic behind them. For example, drug companies point out that while it may cost just $0.20 to produce a pill that's sold for $5, it may have cost the company several hundred million dollars to develop that drug. But the disparity can chafe nonetheless. Consider this real-life example from a Commentary article by Peter Huber that I ran across at MarginalRevolution.com: "While Pfizer
But wait -- there's more to make us wring our hands and gnash our teeth. For one thing, many terrible diseases, mostly those afflicting poverty-stricken masses, are being either ignored or underresearched by drugmakers. Why? Well, one cynical answer is that the ultimate consumers of the expensive-to-develop drugs are destitute.
Silver linings in the cloud
As much as we might gripe about the pharmaceutical industry, it has given us numerous medications to cure us, aid us, and make our lives better and longer. Now and then, drug companies go even further. Pharmaceutical history aficionados, for example, could tell you how Merck
Treatment programs now exist in 34 countries ... and more than 40 million people receive Mectizan to treat river blindness each year. In 1998, Merck expanded the [program to prevent] lymphatic filariasis (LF), commonly known as elephantiasis.... In 2003, more than 20 million people in eight countries received Mectizan to prevent LF.
Mr. Huber's article offers another reason to look kindly on the pharmaceutical industry: Think about our massive health-care system, with its rocketing costs, annoying HMOs, expensive hospital stays, and the like. Now imagine much of it going away -- thanks to drugs. Here, let Mr. Huber explain it better:
Prescription drugs currently account for well under 20% of the health-care budget. Within a generation or two, they will undoubtedly account for most of it -- which will be another good thing. Pharma's biochemical cures always end up far cheaper than the people-centered services they ultimately displace. Moreover, while much hands-on care only drags things out or soothes, the best medicines really cure. It is true that, early on in the pharmacological assault on a grave disease, drugs also stretch things out and can fail to beat the disease, so we often end up buying more drug and more doctor, too. But eventually drugs improve to the point where they beat the disease and thus lay off both doctor and hospital.
See? Pretty compelling and reassuring, no?
A green lining in the cloud
Here's one more reason to like drugmakers: They can make you rich -- or at least wealthier than you are. Invest in healthy, growing companies, and while you're forking over $100 for some pills, you may also be receiving $150 in dividends!
Here are some recent Fool.com articles on firms you might want to consider:
(NASDAQ:TEVA): "Time to Make Room for Teva?"
- Wyeth: "Wyeth Wins Again"
(NYSE:LLY): "Lilly Wilts"
- Pfizer: "Pfizer's Big Plans"
(NYSE:NVS): "Novartis Pays for Its Shopping Spree"
(NYSE:FRX): "Survival of the Forest"
(NYSE:BRL): "Barr Bulks Up"
And if you'd like to take advantage of even more research on drugmakers, grab a free trial of our Motley Fool Income Investor newsletter service. In it, our dividend expert Mathew Emmert has recommended several pharmaceutical firms among the many companies that pay out significant dividends. The total average return of the newsletter's picks is 14%, vs. 7% for the S&P 500 over the same period. More than 20 companies on the list recently sported dividend yields above 5%, and 13 had yields topping 7%.
Merck and Eli Lilly are Income Investor picks, while Pfizer is anInside Valueselection.
Longtime Fool contributor Selena Maranjian owns shares of Pfizer.For more about Selena, viewher bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.