 "Leading pharma companies' R&D returns continue to slide")
While the research and development (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.
This study, published by the Deloitte Centre for Health Solutions, states that the original cohort (the 12 top pharmaceutical companies as covered in the study) 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 percent in 2010 to just 4.2 percent 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 organisation’s likely R&D returns.
This year, the group of companies analysed 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, global head of healthcare, GlobalData, said that across the 16 companies included in the report, there has been an increasing focus on specialised therapeutics. “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 in collaboration with Deloitte shows an increased degree of specialisation 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,” he added.
This study, published by the Deloitte Centre for Health Solutions, states that the original cohort (the 12 top pharmaceutical companies as covered in the study) 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 percent in 2010 to just 4.2 percent 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 organisation’s likely R&D returns.
This year, the group of companies analysed 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, global head of healthcare, GlobalData, said that across the 16 companies included in the report, there has been an increasing focus on specialised therapeutics. “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 in collaboration with Deloitte shows an increased degree of specialisation 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,” he added.
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