Please login to the form below

Not currently logged in
Email:
Password:

Pharma's return on R&D spend continues to slide

And cost of launching new medicine rises to $1.3bn says report
Lab equipment

The pharmaceutical industry's returns on R&D investment have fallen for the fourth year in a row, according to a report from Deloitte and Thomson Reuters.

Over the same period the cost of launching a new pharmaceutical product has risen 18 per cent to $1.3bn, but late-stage trial failures have taken an eye-watering $243bn-worth of value out of the top 12 life science companies' pipeline for the last four years, says the report.

Meanwhile, the return on R&D investment has declined from 10.5 per cent in 2010 to 4.8 per cent this year, despite the fact that the number of compounds flowing through late-stage development has remained largely stable.

The cohort study by Deloitte and Thomson Reuters includes the 12 companies that spent the most on R&D, with the analysis focusing on projects in phase III or submitted for approval.

"The largest pharmaceutical companies have performed well in terms of bringing new products to market but are struggling with diminishing returns on investment," said the two research firms in a statement, adding that while R&D spend has increased in absolute terms, efforts to improve efficiencies have yet to kick in.

Since 2010 the top 12 companies have launched 105 products with a value of around $770bn and brought another 167 projects into late-stage development, valued at $819bn.

The projected peak sales per asset has, however, declined by 43 per cent - from $816m to $466m - to reflect the impact of austerity measures around the world. Moreover, projects are spending much longer in late-stage development as studies are becoming increasingly complex and expensive.

The analysis also reveals wide differences between the top 12 companies in terms of their R&D performance, with five of the 12 actually boosting investment returns by 7 per cent or more.

"The leaders in the cohort are weathering the storm," commented Julian Remnant, head of Deloitte's European R&D advisory practice, although the report does not specify which companies are doing better or worse. One company was deemed to be declining in terms of pipeline momentum, although the 11 others were all going in the right direction.

The authors have identified three areas central to improving R&D investment returns, including: focusing efforts on genuine unmet needs and demonstrating value and cost-effectiveness; preserving and developing talent in the R&D workforce; and making use of analytics to enhance decision-making.

"These approaches go beyond simple value preservation and straight line cost reductions to improve R&D returns," said Remnant.

The $1.3bn estimate for new drug development cost is bang in line with the number proposed by the Tufts Center for the Study of Drug Development a couple of years ago, although that figure has been challenged from a number of quarters, including GlaxoSmithKline chief executive Andrew Witty and Sir Andrew Dillon, CEO of the UK's National Institute for Health and Care Excellence (NICE).

Article by
Phil Taylor

5th December 2013

From: Research

Share

Tags

COVID-19 Updates and Daily News

Featured jobs

PMHub

Add my company
Blue Latitude Health

Blue Latitude Health is a creative marketing consultancy. Founded in 2003, our combination of heritage, approach and capability gives us...

Latest intelligence

Top 10 ways to leverage the Impetus InSite Platform® to (virtually) launch your brand
The Impetus InSite Platform® can be used to facilitate virtual and hybrid engagement at all stages of the product lifecycle. Here, we share 10 of the most popular ways to...
Employee wellbeing in creative agencies: three tips to get you started
Paul Hutchings, founder of fox&cat, and new friend, Welfy, a workplace wellbeing training firm, discuss the importance of collaboration...
Managing unhelpful pressure in your creative agency: the human approach
Paul Hutchings, founder of fox&cat, answers the questions: what does it mean to be human in 2021? Are we putting ourselves under too much pressure?...