GP said idea to product costs 1B just for r&d. That and 1B amortized over failures (and including marketing) cannot be true at the same time unless there are no failed attempts and unless marketing cost is zero.
I've seen you mention marketing several times. What expenditures would you include as a marketing expense?
I'm also not sure what you would define as a failure. Drug development often starts with several candidates for a target. Over the cause of development the list is trimmed, as candidates show lack of affinity for the target or have side-effects that make them unviable. Would you consider each of the excluded candidates a failure?
> I've seen you mention marketing several times. What expenditures would you include as a marketing expense?
I don't get to define that, companies do, but basically it includes everything that does not involve a lab, technician, doctor, nurse, statistician/programmer, etc. The US and the rest of the world are quite different here - if you've ever watched US broadcast in the evening, you'd see TONS of ads for prescription only medicine ("suffering from foo? Ask your doctor about bar"); that's marketing. Taking three hundred cardiologists on an all-expenses-paid 7-day cruise with one 30-minute "purely informative lecture about our new drug" and 7 days of fun? That's marketing too. Lobbying to congress? That's also marketing.
Outside of the US, the marketing budgets are smaller and less overt - but the cruise-style legal bribe-like events are prevalent everywhere.
> Would you consider each of the excluded candidates a failure?
Possibly. You've described one style, but it's not the only one. Many times, it's a weird result from some other research (how Viagra was discovered, how DCA tests were started).
But many things are essentially complete and utter failures - you have a line of research where no viable compound was found at all. BiondVax just failed a 15-year mission trying to develop a universal flu vaccine. Remdesivir is essentially failed even though it is FDA approved (It failed for Ebola; if you look at the data critically, it failed for SARS-COV-2 -- which the WHO's recent studies show even more clearly).
There is some benefit from this research - new techniques, often new devices - but the drug itself is a failure in the sense that it will not generate any income to the company.
Edit: just saw your earlier comment about marketing. It is those things (which you and I mentioned) and a lot more, but it is basically for the company to define in their books and a rule of the thumb would be “an expense a university department developing this to completion without expectation of profit would not have to spend”
