pharmaceutical innovation 2017


A new future for R&D?

Measuring the return from pharmaceutical innovation 2017

The pharmaceutical industry continues to face an extremely challenging R&D environment and has yet to turn a corner in terms of its R&D value proposition. Despite this, the Deloitte UK's report presents an optimistic road ahead for R&D and business leaders, exploring the emerging technologies that have the potential to dramatically transform the productivity and efficiency by which drugs are discovered, developed and brought to patients.

The eighth annual pharmaceutical innovation study by the Deloitte Centre for Health Solutions looks at the state of R&D in the biopharma industry and estimates the return on investment that 12 large cap biopharma companies may expect to achieve. The report also includes an extension cohort of four mid-tier biopharma companies.

Key findings for top 12 biopharma

  • R&D returns have declined to 3.2 per cent, down from 10.1 per cent in 2010
  • It now costs these companies almost $2bn to bring a drug to market
  • Projected peak sales per asset more than halved between 2010 and 2016 but have increased by 18% in 2017
  • This year’s uptick in costs and sales per asset is due to the drop in the number of assets in late-stage pipelines–from 189 in 2016 down to 159 in 2017.

How are biopharma R&D returns faring?

Other key findings

  • Smaller firms outperform larger peers: Since 2015, in addition to the 12 companies included in the original cohort, four mid-tier biopharma companies have also been added to the study. These continue to out-perform the original pharma cohort, with projected returns of 11.9 per cent in 2017 (up from 9.9 per cent in 2016), but are still below the high of 17.7 per cent set in 2014.
  • Rise of cancer therapies: From 2010-17 the percentage of forecast late-stage pipeline revenue from oncology for the top 12 companies has increased significantly, from 18 per cent in 2010 to 37 per cent in 2017. High levels of unmet medical need and higher potential returns are attracting companies.
  • Emerging technology and new drug development paradigms offer promise: Emerging technologies such as artificial intelligence, real world evidence (RWE), and new clinical trial models have the potential to transform how drugs are discovered, developed and brought to patients.

How digital technology is transforming the future of R&D

Despite many challenges with biopharma R&D, there are numerous examples of innovation that demonstrate pharma’s resilience and optimism about the future – from the approval of numerous immunotherapies to the first ever approvals of chimeric antigen receptor T cell (CAR-T) therapies this year.

Furthermore, there are a range of advanced technologies that have the potential to transform R&D across the entire value chain. Biopharma companies are just starting to experiment with these technologies, and early adopters will reap the rewards of a much more efficient R&D process, improving both the quality of assets and the time and cost it takes to get them to market.

We believe that applying these emerging technologies could lead to a vibrant and sustainable industry – an outcome that is vital to the future of global public health.

Download Measuring the return from pharmaceutical innovation Methodology.
View or download the report
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