Measuring the return from pharmaceutical innovation 2019
Ten years on
The past decade has seen increasing pressures undermine the productivity of biopharma R&D, leading to a decade of decline in the return on investment. At the same time, innovative new treatments are changing the face of disease management. New treatment modalities and an increasing understanding of precision medicine have led to the need for new R&D models and a future where medicine is more participatory, preventative and personalised.
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A decade of decline and transition
While biopharma companies continue to develop increasing numbers of innovative life-enhancing and life-saving therapies, the cost of paying for these treatments has come under increasing scrutiny from payers, providers and patients.
The changing prevalence of chronic diseases have increased the demand for new therapies. Scientific advances in areas such as genomics have highlighted their potential as cost-effective affordable alternatives. At the same time, the industry faces constraints around market access and pricing, changing patterns of demand and continuing downward pressure on health care budgets. This represents a volatile and highly uncertain economic environment to operate in and try to achieve productivity improvements.
Measuring the return from pharmaceutical innovation
Analysis from the first nine years of our Measuring the return from pharmaceutical innovation series concluded that a transformational change in R&D productivity is required to reverse declining trends in R&D returns across the biopharma industry. Analysis from this, our tenth report, shows that this conclusion still holds true today.
Key findings for top 12 biopharma companies:
- R&D returns have declined to 1.8 per cent - a slight decrease of 0.1 per cent from 2018. This represents an average decline of 0.83 per cent per year.
- The cost of bringing a drug to market decreased from $2,168 million in 2018 to $1,981 in 2019.
- This year the average of the forecast peak sales per asset fell below $400 million for the first time, to $376 million in 2019, down from $407 million in 2018.
The future of biopharma innovation
Biopharma’s future will be in creating highly individualised treatments that target specific needs and even specific patients. Developing these treatments will bring even more challenges than developing traditional therapies. Already, biologics are proving more expensive and time-consuming to develop and be approved, and inherently generate less revenue as they target smaller groups of patients. Traditional small molecules will not be completely replaced any time soon, but as next gen therapies bring about personalised medicine, biopharma will need to adapt its business and operating models to continue to drive innovation.
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Vicky leads the Life Sciences and Healthcare business across North & South Europe, and is based in Switzerland. She is a member of the North & South Europe and Swiss Executive teams. Vicky brings more than 20 years of global life sciences consulting experience to our clients in Europe and around the globe. She advises executives across a range of topics including executive transitions and transformation. Read more
Colin is a Partner in our Life Sciences practice. He has been with Deloitte since 2011 working in the US firm, until 2014 when he moved to the UK practice. Colin’s client advisory work in the Life Sciences sector ranges across strategy and operations focused on the R&D function including operating model development and implementation as well as post-merger integration (PMI). Read more
Laveshni is a Director in the Deloitte Consulting Life Sciences & Healthcare practice. Laveshni has extensive experience in leading operating model development, performance improvement and regulatory compliance programs within product development at major pharmaceutical companies, biotechnology companies and contract research organisations. Read more