The myth of Big Pharma vaccine profits – it’s not what they say it is

The myth of Big Pharma vaccine profits – it’s not what they say it is

Several of the ongoing memes, tropes and fabrications of the vaccine deniers is somehow, somewhere, in some Big Pharma boardroom, a group of men and women in suits choose the next vaccine in some magical way, and foist it upon the world just to make billions of dollars through vaccine profits. Of course, while magically concocting this vaccine brew, these pharmaceutical execs ignore ethics and morals just to make a profit on hapless vaccine-injured victims worldwide.

The Big Pharma vaccine profits conspiracy trope ranges across the junk medicine world. Homeopathy, for example, claims that Big Pharma suppresses the data that shows water cures all diseases. Like Ebola.

But the Big Pharma vaccine profits conspiracy is still one of most amusing myths of the antivaccination world.


Myths about vaccine profits

The vaccine deniers pollute the internet with their screeds about the Big Pharma vaccine profits. One of them said, “measles expert Offit has already made millions of dollars profit from his ties to vaccines and the measles MMR vaccine maker Merck.” Using a childish ad hominem, the article calls him, Dr. Paul “For Profit” Offit. Seriously, that’s how you’re going to “prove” that vaccines are a Big Pharma conspiracy? A 3rd grade playground tease? That’s the best you can do.

You can find whole threads of tedious commentary about Big Pharma vaccine profits on any typical anti-vaccine forum. One of the more illogical claims is that “maybe vax companies see vaccines as more of an investment? Break mostly even on what the vaxes cost to make and sell, but make a bank load of money on treating all the chronic problems they cause!”

Of course, that would be a business strategy that would be laughed out of the secret Big Pharma boardroom, because they know that vaccines don’t cause chronic problems. The vaccines prevent it.

What is infuriating about these antivaccine rants is that not only is their scientific knowledge lacking, so is their business knowledge. Of course, I shouldn’t be surprised given that almost all vaccine deniers exhibit the same characteristic–a few hours googling is equivalent to a Ph.D., or, in this case, and an MBA.


An amateur psychological analysis

Although I shouldn’t do so, I will. The antivaccine claims result from  the Dunning–Kruger effect‎, a cognitive bias in which unskilled, and uneducated, individuals suffer from an illusory superiority of their knowledge and skills, which causes them to overestimate their abilities in critical thinking abilities and knowledge of a field as much higher than average.

It continues to amaze me that these science deniers (whether GMOs, evolution, climate change or vaccines) think that reading a few pages on the internet is somehow equivalent to years of study. Attacking Paul Offit by calling him childish names must make the science deniers believe that brings Offit down to their level of knowledge, except that it doesn’t. Offit has been researching infectious diseases and vaccines for over 25 years, and probably knows more about these topics than the total knowledge of every single vaccine denier in the world.

I used to think that the Dunning-Kruger effect was only about the deniers science skills in vaccines. Apparently, it extends to their business knowledge of how a real corporation is managed. So I thought I’d look at the great Big Pharma vaccine profit conspiracy and deconstruct it as best as I can.

I’m going to try to set aside the science side of this discussion (because there is no real science debate about vaccines, and stick to the business side). I actually have 15 years of background in accounting and financial analysis of biomedical companies (don’t ask how I evolved from research to business development), which requires high level mathematical skills, while still relying upon scientific critical thinking.

Lucky for me, I had broad training and education, so my value as a Big Pharma shill is unparalleled. If only those checks would quit bouncing.

But seriously folks, let’s take a look at the Big Pharma vaccine profits from two different perspectives.

First, are vaccines as profitable as other Big Pharma endeavors? And second, if Big Pharma execs were truly immoral and corrupt, would selling vaccines actually be the best business strategy?


Are vaccines really profitable?

It would be difficult for me to actually claim that vaccines are not highly profitable. They are an important source of both income and profit.

But here are some facts that might temper your expectations that vaccines are that valuable:

But even though vaccine revenues are a tiny percentage of Big Pharma revenues, it is still a huge number, there’s no debating that point. And new companies are entering the vaccine market, because as new vaccines are developed and as more adults get vaccinated, the market growth of vaccines is substantially higher than other pharmaceuticals.

The worldwide revenue growth rate for all pharmaceuticals is around 6-7% per year, but around 10-15% per year for vaccines. Now, this type of growth rate will not last forever, because eventually the market becomes saturated, and much of the growth will be in lesser developed countries, where the market value for vaccines is substantially less than in developed countries.

Let’s look at that US$24 billion in worldwide vaccine revenues more carefully. All of the numbers below are in billions of US dollars and were estimated based upon Vaccines: Expert Consult (page 41).

Revenues   24.0
Cost of goods sold (manufacturing, distribution, returns) 7.7
Gross margin (often called gross profit) 16.3
Administration (corporate overhead) 1.7
Sales and marketing 4.1
Net profit 10.5
Research &  Development 2.7
Taxes 4.2
Depreciation 1.1
True profits 2.5

So vaccines generate about US$10.5 billion in “net profits,” or about 43.8% of revenue. Most non-vaccine pharmaceuticals would generate about US$11.1 billion in net profit, or 46.3%,  from the same revenue–thus, vaccines produce around 5% less profits than do other pharmaceuticals.

This lower profit for vaccines is because non-vaccine pharmaceuticals have a lower cost of goods as a result of fewer returns due to spoilage and change in antigens (like from flu season to flu season). Regular pharmaceutical products rarely change from year to year, so something manufactured in 2013 can be sold in 2014 as long as it still has shelf life remaining. Moreover, distribution is a lot more expensive for vaccines, because they need to be shipped more carefully (which is much more expensive) to prevent spoilage.


Analysis of Big Pharma vaccine profits

Still, US$10.5 billion sounds like a boatload of cash, but let’s see what happens to that boatload.

  • Every drug, whether a new vaccine or new drug for erectile dysfunction, costs around US$2.8 from discovery to regulatory approval (although other analyses show a cost of US$3.8 to 11 billion) each to fully develop, depending on the drug and the market. But despite what some believe about Big Pharma, drug development is not a slam dunk. For example, for many drugs, only around 12% gain final approval from the FDA, so the vast majority of drugs that enter clinical trials end up as failures.
  • Since Big Pharma funds its own R&D, it has to pay for both its successes and its failures. Using financial data from a typical broad-based pharmaceutical company like Johnson & Johnson spends about 11.4% of REVENUES (not profit) on R&D (pdf). So out of the US$24.0 billion in Big Pharma vaccine revenue, about US$2.7 billion is removed from the net profit for R&D expenses (which are not counted in the administrative expenses for this exercise), so we’re down to US$7.8 billion.
  • One of the mistakes made by individuals with no experience in business finance make two falsehoods. First, they assume that risk capital, the money to finance operations, including R&D, is free. And it is freely available. But it’s not. Second, the fail to understand that Big Pharma needs to finance future R&D operations from its own cash reserves (or borrow at high rates).
  • Big Pharma also has to pay taxes on the net profit. And because Big Pharma has manufacturing, R&D, and administration facilities in modern nations (they need access to intelligent, well trained employees), they have a more difficult time in moving revenues outside of taxing authorities. They usually pay around 40% in taxes on the net profit. And they have to depreciate all of their capital, whether its buildings or equipment, because eventually they have to replace it
  • Companies need to acquire technology too, which costs money. Back to Johnson & Johnson (JNJ). They weren’t much of a player in vaccine manufacturing and sales until 2011, when they paid US$2.4 billion for Crucell, a manufacturer of vaccines. In other words, JNJ expended one year of profits for every vaccine sold in the world, just to purchase one vaccine manufacturer. And that expenditure has to be expensed (out of cash reserves, but is accounted for over some period of time, possibly seven years).

When all is said and done, that that US$24 billion Big Pharma vaccine revenue becomes around US$2.5 billion in net vaccine profits (usually stated in accounting terms as EBIDTA).

It may actually be quite a bit less, because I’m ignoring things like cost of risk capital (even though Big Pharma is mostly self funded, it’s not always so, and if that capital could make more money invested in gold or something, it’s a lost opportunity). Given this level of profit, and spread over 50 or so vaccines, it’s hard to imagine that Big Pharma executives are sitting in that Boardroom laughing at how they’re printing cash and storing gold bars because of vaccines.

Just for some additional perspective about Big Pharma efforts – Lipitor, probably the #1 drug in revenues ever, sold US$10 billion worldwide in 2011. That’s one drug, with one type of manufacturing facility. In just a few locations. Those Big Pharma execs would rather have Lipitor once or twice over than vaccines.


Are vaccines a good business strategy?

Going back to the laughing, unethical Big Pharma executives sitting in their boardroom, are they really conspiring to push vaccines on us, because it makes so much money? Or, as we saw above, would investing in another kind of medication make more money? Or would they make more money not even selling vaccines?

Let’s take an example of just one infectious disease, measles. According to the CDC, one hospitalization for a serious measles complication costs more than US$142 thousand. Typical cost breakdown of hospital billing indicates that pharmaceuticals and other consumables (syringes, IV’s, saline, etc.) are around 35-40% of the total cost to the patient (see Note 1).

So, just one serious case of measles, Big Pharma could get up to US$56,000 per patient. How much is one dose of MMR vaccine to prevent measles?

Let’s assume that Big Pharma ended production of all vaccines today, because the evil Big Pharma execs wanted rapidly increase their profits. According to the CDC (pdf), there are about 4 million births in the USA every year. Starting today, those 4 million children annually will not be vaccinated, and the vaccine deniers will be dancing in the streets.

Let’s look at the hospitalization rate for those 4 million children for every single vaccine preventable disease:

DiseaseRisk of diseaseHospitalization rateHospitalization no.Hospitalization costTotal cost, US
Diphtheria0.60%100.0%24,000$16,982$ 407,568,000
Tetanus0.00%100.0%12$102,584$ 1,231,008
Pertussis4.72%16.0%30,208$16,588$ 501,075,200
Hib, Acute0.16%17.0%1,074$33,716$ 36,223,933
Polio, Paralytic0.03%100.0%1,240$29,168$ 36,167,700
Measles10.64%55.0%234,102$25,046$ 5,863,318,692
Rubella6.21%50.0%124,100$62,233$ 7,723,115,300
Mumps3.30%50.0%66,000$28,628$ 1,889,448,000
Hepatitis B0.07%50.0%1,440$21,357$ 30,753,360
Varicella9.84%1.0%3,936$13,125$ 51,652,782
Invasive Pneumococcal Disease0.21%50.0%4,240$14,823$ 62,849,520
Influenza42.00%0.9%15,120$3,990$ 60,328,800
Rotavirus12.75%2.1%10,710$3,994$ 42,775,740
Total US burden$ 16,706,508,035
Total developed world burden, est.$ 50,119,524,106
Numbers were derived from several sources. See Notes 2 and 3.

Of course, this is an imaginary scenario where everyone stops vaccinating because the junk science about vaccines win the day.

Outbreaks, epidemics and pandemics would soon occur within the first 1-2 years after we end vaccination. Based on information developed by the CDC and others, the total worldwide economic burden if we suddenly ended vaccines would exceed US$50 billion (and this ignores flu pandemics that might suddenly ravish the pediatric population).

If we stick with the estimate that about 40% of the cost of hospitalizations will fall to Big Pharma, then they would make about $20 billion a year, worldwide, from not vaccinating. But remember, most vaccines are given, at most, 2-3 times, so, long-term, the revenues derived from vaccines is rather flat, unless new diseases are prevented. But, the revenues from the diseases themselves repeat every single year, and possibly multiple times per child.

And most of the products used to treat these diseases don’t require the research and capital investment that vaccines require. In other words, the income derived from vaccine preventable diseases would be more profitable than vaccines.

If we really believe that Big Pharma executives are greedy sociopaths looking for more money, then we have to carry that descriptive to it’s logical end. They would be ending vaccines tomorrow. Maybe today, if it’s not too late.


But there’s more

Actually there are other issues that become problematic if we suddenly had this size of an epidemic. For example, the number of ICU beds per capita has dropped by 75% since the 1960’s partially as a result of the reduction in numbers of children with infectious diseases.

If we suddenly stopped vaccinating because Big Pharma wanted to make billions more profits, our hospitals would be overwhelmed. And guess who’s making money then? Big Mortuary. Because children will die in much higher rates than in the 1950’s because we couldn’t handle it.

And I’m ignoring all of the other burdens to modern countries if this happened. Parents who are unable to work. Long term healthcare costs for children who are seriously injured by these diseases. Emotional stress. Overwhelmed hospitals that can’t treat other chronic conditions. Even countries that have superior healthcare systems would collapse under the strain.

So, all of you people at Age of lying about Autism, how much money are YOU receiving from Big Pharma to create the illusion that vaccines are dangerous. Because, now I have uncovered the real goal of Big Pharma–get rid of vaccines. Yes, you vaccine deniers are the real shills for Big Pharma. How unethical can you be, sacrificing the lives and health of children for a few dollars from Big Pharma.

And I haven’t gotten to Big Iron Lung who has waited 60 years for the chance to get back into the game. I bet they’ve been investing in shills to push lies about polio vaccines.

I’m not naive. I know that pharmaceutical companies manufacture vaccines because they are able to make a decent profit, the goal of any corporation. But the profits are used not to buy gold bars to give as gifts to executives (or to pay me), but most of it is plowed into future generations of better drugs and devices.

They are not trying to harm humanity, because if they were ruthlessly profit motivated, like the narrative pushed by the science denying antivaccination crowd, Big Pharma would close down vaccine research and manufacturing, and wait a year for huge epidemics.

Is Big Pharma perfect? Hell no, and I’ve said it before.

But vaccines save lives. And Big Pharma makes sure that happens. And they make that happen, despite the better profit scenario of not making one single vaccine.



  1. Determining cost breakdowns of hospital bills is a complex, bewildering, and frustrating process. So, I estimated it based on several hospital bill breakdowns I found on the internet, including a personal one (for way too much money). I promise to revise these estimates if I can find actually good information .somewhere. In addition, if there was a range of estimates, I used a mean, or, better still, original data from the source.
  2. The data for this chart was adapted from a CDC study of the Vaccines for Children Program, which I have discussed previously. It only includes data for vaccines on the current schedule for babies and infants, and does not include other vaccines such as for HPV and meningitis. The estimates use the CDC estimate of 4 million live births per year in the USA. The data does not include other costs, like lost income for caretakers, pre-hospitalization costs (which is listed in the CDC study), or death. Big Mortuary would surely profit from the 40,000 deaths a year that would suddenly be added to the cost of eliminating vaccines.
  3. Flu data was adapted from here and here.

Editor’s note – this article was originally published in November 2015. It’s been updated here for readability and to add information.


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The Original Skeptical Raptor
Chief Executive Officer at SkepticalRaptor
Lifetime lover of science, especially biomedical research. Spent years in academics, business development, research, and traveling the world shilling for Big Pharma. I love sports, mostly college basketball and football, hockey, and baseball. I enjoy great food and intelligent conversation. And a delicious morning coffee!