. 2020 Mar 3;323(9):834–843. doi: 10.1001/jama.2020.0442

Table 2. Differential Profit Margins of Pharmaceutical and S&P 500 Companies.

Profit Margin^a	Sample Period	No. of Companies	No. of Fiscal Years^b	Reference Profit Margin (95% CI), % Revenue^c	Differential Profit Margin of Pharmaceutical Companies Relative to S&P 500 Companies (95% CI), % Revenue^d	Pseudo R²
Gross profit margin
Bivariable^e	2000-2018	392	6889	37.4 (35.2 to 39.6)	39.1 (32.5 to 45.7)	.06
Multivariable^f	2000-2018	392	6889	32.1 (28.8 to 35.4)	34.6 (25.3 to 44.0)	.07
Multivariable (R&D >0)^g	2000-2018	219	3553	37.6 (33.1 to 42.0)	30.5 (20.9 to 40.1)	.08
Multivariable (S&P 500)^h	2000-2018	378	5087	30.9 (27.6 to 34.2)	37.2 (25.4 to 49.0)	.09
Multivariable (2014-2018)ⁱ	2014-2018	392	1918	37.5 (35.6 to 39.5)	35.8 (28.3 to 43.4)	.11
EBITDA margin
Bivariable^e	2000-2018	392	6889	19.0 (17.8 to 20.3)	10.4 (7.1 to 13.7)	.01
Multivariable^f	2000-2018	392	6889	15.9 (14.5 to 17.4)	8.6 (4.7 to 12.5)	.02
Multivariable (R&D >0)^g	2000-2018	219	3553	15.3 (13.7 to 16.9)	9.2 (5.2 to 13.2)	.04
Multivariable (S&P 500)^h	2000-2018	378	5087	17.2 (15.4 to 19.0)	11.1 (5.4 to 16.8)	.06
Multivariable (2014-2018)ⁱ	2014-2018	392	1918	19.7 (18.6 to 20.7)	9.0 (2.9 to 15.1)	.04
Net income margin
Bivariable^e	2000-2018	392	6889	7.7 (7.2 to 8.2)	6.1 (2.5 to 9.7)	.003
Multivariable^f	2000-2018	392	6889	5.4 (4.7 to 6.2)	4.1 (0.6 to 7.5)	.01
Multivariable (R&D >0)^g	2000-2018	219	3553	6.1 (4.9 to 7.3)	3.6 (1.1x10⁻² to 7.2)	.02
Multivariable (S&P 500)^h	2000-2018	378	5087	5.9 (5.0 to 6.8)	6.8 (3.5 to 10.1)	.05
Multivariable (2014-2018)ⁱ	2014-2018	392	1918	8.0 (7.3 to 8.8)	2.3 (-1.0 to 5.6)	.02

^{^a}

For definitions of financial metrics, see the Box or eAppendix in the Supplement.

^{^b}

Each fiscal year represents 1 observation in the statistical analysis.

^{^c}

The reference profit margin is the intercept of the median regression models. In the bivariable model, the intercept represents the median profit margins of S&P 500 companies. In the multivariable model, the intercept represents the median profit margin of S&P 500 companies when all year indicator variables and the company size variable are set equal to zero.

^{^d}

The differential profit margin of pharmaceutical companies relative to the S&P 500 is the coefficient of the PHARMA indicator variable. The coefficient value represents the differential profit margin for pharmaceutical companies compared with S&P 500 companies (after controlling for size and year in the multivariable model).

^{^e}

The bivariable median regression model included an indicator variable (PHARMA) set equal to 1 for pharmaceutical companies. The bivariable model does not include terms for company size (market capitalization) or year (year fixed effects).

^{^f}

The multivariable median regression model included an indicator variable (PHARMA) set equal to 1 for pharmaceutical companies, a variable to control for company size (market capitalization), and an indicator variable for each year to control for time trends.

^{^g}

Estimates of differential profit by multivariable median regression on data only from fiscal years with nonzero research and development (R&D) expense. All pharmaceutical companies had nonzero R&D expense for all years in the study. This model compares the profitability of pharmaceutical companies to only those S&P 500 companies with nonzero R&D expense in a given year.

^{^h}

Estimates of differential profit by multivariable median regression on data only from fiscal years during which a company was included in the S&P 500 Index. This excludes data from companies in the years before they were included in the S&P 500 Index.

^ⁱ

Estimates of differential profit by multivariable median regression on data only from 2014 to 2018.