Cost of developing new drugs may be lower than industry claims: trial

10M. Failure is still useful information so the other 9 trials cost 10M each but didn't produce a viable product, but that doesn't mean nothing of value was gained.

With just 10M in bank, you will fail and learn a lot.

So like any business. Just because 90% of restaurants fail doesn't mean the cost of running a restaurant is 10x of what it actually takes to run a successful one.

Of course it is. Investors have to pony up for 100% of the restaurants, so society as a whole has to pay one way or another for each economic experiment

EDIT

I should clarify - since investors know they have to pay for 100% of restaurants, of which 90% will fail, they price this in when they decide to invest in a restaurant.

Drug companies have to pay for all ten trials, not just the one that works out.

Restaurants are a bad example because people invest in it on an emotional basis. Drug trials are probably decided on more the same basis as bond issues or insurance.

If the risk of failure is high, investors have to demand a high premium or go broke.

Restaurants also price their food considering the risk taken by the entrepreneur launching the restaurant; which is substantially lower as its a high cash flow business with immediate feedback for a low capital investment

Restaurants fail very differently from drug trials.

They run at some % loss for a while until money or investor patience runs out.

A drug trial that fails can be a 10 year process of shoveling money in a pit, none of it to be ever seen again.

It's a businesses famous for its low succes rates, which can be from start to end less than 1 in 100.

Drug companies need to offer those who provide the capital to run these experimental projects at huge losses for years a way to recoup their losses - otherwise nobody would be willing to fund the effort.

The way to do that is patent and charge absurdly high prices for those few succesfull drugs that are developed for as long as you can.

Sounds like a losing strategy for most customers and businesses

Why not pool costs and split profits. Everyone gets less.. less risk, less losses, less profits.

Fewer drugs developed.

Why have only a single winner get the proceeds of getting a winning lottery ticket, when everyone could band together, buy all the tickets, and split the proceeds?

You're describing mining pools and they're incredibly popular for their profitability compared to trying to find a winning lottery ticket on your own.

Crypto != the lottery or drug development.

That's already the case. This is why most drug companies are quite large. And investors spread their investments. Competing as a small startup is extremely hard compared in this field compared to for example software.

Unless you're asking why there is not a single state-run drug company doing everything, in which the case the answer is scale has disadvantages, having some diverse set of companies in a space like this has advantages, and state run centralism has been debunked so many times I can't be arsed.