Why is insulin dominated by a few companies globally and if bacteria are used to produce human insulin, why can no other company replicate this?
In: Biology
Because building businesses and factories is expensive, you still have to make money, and your forthcoming competitors can gut you by simply lowering their price. One of the most important concepts to understand in economics is [barriers to entry](https://en.wikipedia.org/wiki/Barriers_to_entry), the fixed costs one must expend in order to even start a business in a particular industry. So, for a business like pharmaceuticals, you’ve got a lot of barrier to entry. You’ve got to recruit technical talent, you’ve got to acquire expensive equipment for both manufacturing and testing, and you’ve got regulatory hurdles you’ve got to clear, you can’t simply just start making a drug and sell it directly to pharmacies, governments have approval processes to ensure your product isn’t going to harm people.
However, as others in the thread have pointed out, it’s not the cost of manufacture which is hiking up the prices. It’s the inelastic demand. If you’re diabetic, you *need* insulin. End of story. So you’re going to pay for it at whatever price you need to in order to not die. Also, the amount you’re going to consume isn’t going to change if the product is made more cheaply. There’s no pricing strategy manufacturers can pursue that’s going to make them more money, other than the biggest gouge they can get away with.
This is a little-discussed problem with free markets. One of the critical aspects of a truly free market is that you need to be free to **NOT** make a purchase if the price is too high. But for many goods, like housing, health care, and education, that’s very bitter choice to make.
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