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CaptainCrawdad Since: Aug, 2009
Jul 22nd 2012 at 10:50:08 AM •••

Removed:

  • Artistic License – Economics: The evil Mega Corp's intent to withhold the cure for a deadly disease which half the world's population suffers from; the logic being that "treating the disease would be more profitable than curing it." However, this belief suffers from numerous problems. For instance, given that half the world's population is a very sizeable group, the Mega Corp could yield a tremendous profit from distributing a cure at an extremely low markup (if 500,000,000 people suffered from the disease, a cure would net $5 billion in the corporation's pocket if they only sold it for a $10 profit per person, after adding in the base costs for its basic production), and since it would only cure people who have the disease, it wouldn't prevent new people from getting it themselves, meaning there would always be a market with high demand for the product. Instead, however, they distribute lesser treatments that would need to be taken on a continual, never-ending basis for the exorbitantly high price of $2,000 per clinical unit, which would be far more than most people suffering from the disease could ever hope to afford, especially over any lengthy period of time, and ultimately would net noticeably lower returns.

This entry seems to be making a lot of assumptions about the mega corp's business model. Ultimately the premise of "the treatment is more profitable than the cure" is sound. If you get $10 of net profit per person for a cure and $10 per year of treatment per person, the treatment will make more money. The fact that the cure is also quite profitable is Cut Lex Luthor a Check.

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SeanMurrayI Since: Jan, 2010
Jul 25th 2012 at 2:01:17 PM •••

Except the treatments aren't making "$10 per year of treatment per person" but are explicitly priced at $2,000 per dosage (and that's just for one publicly available medicine), and dosages need to be taken far more frequently than once a year. Nowhere in the movie or in the example you just cut are the treatments said to be making at "$10 per year of treatment per person".

To elaborate, how many people out of the "half the planet" who are said to have this disease in the movie would have enough disposable income to hand over $2,000 again and again for a routine dosage? For the large majority of people suffering from the disease, they likely can't afford that cost*

. For the business that markets the treatments at such a ridiculously high cost, that means they'll be losing millions (if, not billions) of potential consumers who simply would not be able to afford any of it.

Regardless of the product, the money that it makes for a business is mostly dependent on both its demand from consumers and whether it is sold at a price those consumers can afford. An outright cure for a disease would certainly have significantly higher demand than lesser treatments, seeing that most consumers who are sick would much rather prefer a product that makes them NOT sick, as opposed to one that still leaves them sick. And the consumers' cost for the cure is practically guaranteed to be more affordable for them because they would need less of it than they would the treatments; even if the full price for the cure was as high as $2,000 (the same price for each individual treatment), the cure would still be the more affordable option for the consumers because it's just a one-time cost—not a continual payment to be made over and over, like the treatments.

The numbers given in the original example are ridiculously low estimates, but it helps to make the point. 500 million people is likely a very gross underestimate of "half the planet" in the movie, and the low $10 figure for profits off of individual sales shows how a couple billion dollars could be made from a group that is significantly smaller than "half the planet" by marketing something everybody would want at a price anybody could afford.

Restoring.

Edited by SeanMurrayI
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