Measuring the return from pharmaceutical innovation 2015

Macroeconomic pressures have hit the R&D returns of life sciences firms, according to new Deloitte research. The sixth annual pharmaceutical innovation study looks at the challenges the industry faces in generating returns from its R&D investments, while highlighting lessons that can be learned.

Concerns about the prices attached to innovative medicines have combined with macroeconomic pressures to weigh on the research and development (R&D) returns of pharmaceutical firms this year.

The bottom line is that the R&D returns of major life sciences industry groups have now fallen to their lowest point since our records began in 2010.

Deloitte UK’s Centre for Health Solutions’ sixth annual study, Measuring the return from pharmaceutical innovation 2015: Transforming R&D returns in uncertain times is based on the R&D returns of the 12 leading pharma companies and four mid- to large-cap companies. This year’s study explores the biggest challenges facing R&D productivity, while highlighting lessons that can be learned.

After reviewing the estimated returns of 12 leading life sciences companies, our research suggests they need to increase their focus on costs, while accelerating asset development timelines. Comparing their performance with 4 mid- to large-cap companies, we believe there are lessons to learn…

Key findings

Co-produced by the Deloitte Centre for Health Solutions and Deloitte’s R&D services group, in collaboration with GlobalData, the Measuring the return from pharmaceutical innovation 2015 study finds:

·         R&D returns have declined from 10.1 percent in 2010 to 4.2 percent this year.

·         186 products have been launched by the original cohort of 12 life sciences firms since 2010, generating estimated revenues of $1,258 billion.

·         306 assets have entered the late-stage pipeline, accounting for total forecast revenues of $1,414 billion.

·         43 products were given the green light last year, with 2014 a headline period for approvals.

·         The cost of developing an asset has jumped by nearly a third - but forecast peak sales have halved.

·         The four mid- to large-cap companies have outperformed the original life sciences cohort, generating returns 3 times higher between 2013 and 2015. Their asset development costs are 25 percent lower, with their average forecast peak sales 130 percent stronger.