How do companies afford the screening, testing and developing process which can cost millions of pounds?

Usually from investors. (who invest in the hope of getting a big return if they hit on a good drug like Lipitor).

This is the essence of capitalism. People make relatively large investments in industries of all kinds with a hope of future return. If you think about any job, from fruit picking to aerospace, there has to be an initial outlay of capital (in the case of the fruit picker, to buy the land, plant the trees and nurture them to a point where they can be harvested) in order to make jobs possible in any way more complex than “hunter / gatherer”.

They also reinvest from profits, of course.

It’s cost-effective. A lot of that is required so they can’t sell anything if they haven’t done it = no profit.

By charging ridiculously high prices for their products once the developing is done.