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December 17, 2015.
While the R&D divisions of 12 leading pharmaceutical companies have progressed 306 assets into late-stage pipelines since 2010, with projected lifetime returns of over $1.41 trillion, these returns are continuing to decline in percentage terms, according to a study produced by Deloitte in collaboration with research and consulting firm GlobalData.
The study states that the original cohort* has launched 186 products since 2010, with a projected lifetime value of just under $1.26 trillion. However, the collective R&D returns for this cohort have declined markedly, from 10.1% in 2010 to just 4.2% in 2015, while the average cost of asset development has risen by a third.
The study focuses on a longer-term view of R&D returns, as this reduces the volatility of static measures, which can be skewed by particularly high or low revenue expectations. As assets can take approximately 15 years to progress from discovery to launch, and revenue forecasts can change substantially as they progress through late-stage development, a longer-term view provides a more robust analysis of an organization’s likely R&D returns.
This year, the group of companies analyzed has been extended to include four mid- to large-cap companies, so that greater insight can be derived from the R&D returns analyses, particularly around identifying company characteristics that lead to high performance.
Jim Coutcher, GlobalData’s Global Head of Healthcare, comments: “The pharmaceutical industry’s R&D focus has been shifting towards specialty therapy areas, given the high levels of patient unmet need and the identification of discrete patient populations.
“However, the study ... shows an increased degree of specialization within primary care therapy areas, as companies are looking to new types of therapies, mechanisms of action and patient segments as untapped opportunities to deliver value.”
*The original cohort refers to 12 top pharmaceutical companies as covered in the study Measuring the return from pharmaceutical innovation 2015.