Insight into Drug Production Cost Estimation

The pharmaceutical industry is committed to innovate high-quality products that address medical demands globally. In this industry, the production costs constitute a significant portion of overall expenditures, where in 2016, the sector generated approximately $1 trillion in annual revenue, which increased to around $1.6 trillion by 2023. Product costing involves calculating all expenses associated with product development, covering both direct costs—such as raw materials and labor—and indirect costs, including administrative overhead. As a result, numerous studies have analyzed trends across various expense and income categories, with a particular focus on production costs. These studies seek to analyze the connections and variations in cost across various pharmaceutical companies, such as brand-name, generic, and biotech companies. Manufacturers estimate production expenses using current data to identify and mitigate hidden costs resulting from inefficient practices. This study conducted a detailed analysis of drug production costs, presenting two practical examples: Entecavir® and Orlistat®. The production costs of these drugs were examined based on the methodologies outlined in the study.