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Comment by merinowool | Hacker News Reader

It is worth mentioning that drugs are only so profitable because of their legal status. Drugs themselves are very cheap to make - additional cost is simply the risk of getting caught, security and so on. I think those factors don't exist for microchips, so the title is a bit misleading.

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The title is very misleading. Had the author stuck to legit pill making, it could’ve made a fairly apt comparison, but they mentioned drug cartels which implies a very different set of costs / risks. I’d further argue drug cartels have a wider price differential between raw material and wholesale product too, but don’t have a source to back it up.

I’d wager you are correct. Still it is an interesting read and I wanted to share.

Turns out, if BusinessInsider is correct, the raw coca plant leaves needed to make 1kg of cocaine base costs about $650. The same article claims you can get kilos in South America for about $6,500 with purity around 85%. Prices go up the closer you get to the final destination, but as do the risks too of course. If those numbers are accurate, would indicate a gross difference of 10x, not the 172x from source article. I’m surprised the coca leaves go for so much!

Remember that final prices of drugs are “street prices” in quantities of use. So you might have 25,000 USD of a drug, and it might be 2 kilograms, but when you split it up into 2-4g packets, the individual prices are much higher and you might get “one millions” in street value, which is what the police and media like to report. It makes the amount seem so much bigger.

Yes, I know street value. I also know stateside wholesale price too. I just didn’t realize the markup was so huge between source and destination vs raw material and finished product.

Also, cocaine isn’t usually sold in 2-4g packets in most places. Usually it’s 1g or less. Otherwise (but much less often) it’s ~3.5g.

It’s usually sold by a teener (1/16 oz) or eightball here (1/8)

If you are an actual drug company, I suspect politics and approval processes are at least as expensive to the company, as the actual R&D itself. It is incredibly hard to get into the market with todays legislation.

Drug cartels probably spent a lot of money getting out of legal trouble and dealing with international police

The approval process (clinical trials) far outweighs the costs of the R&D proper: https://lifescivc.com/2014/11/a-billion-here-a-billion-there...

That article does not include any marketing costs, that for large companies like Pfizer may be around 30-40% of the total cost.

I'd argue that for drug development, clinical trials are part of R&D. After all, their point is to prove that the product works as intended and that it's safe. For any other product that's considered part of R&D.

Not all drugs are cheap to make. Biologics are notoriously complex to produce reliably and much more expensive than your typical small molecule drug encapsulated in a tablet.

Is this actually true though? I'm sure some now-generic drugs have pretty complex and hard synthesis problems.

I know some medications for sure have struggled because of manufacturing. Whether these are actual problems, or legal problems because some part of the the synthesis is patented, I'm not sure.

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