Measuring the return from pharmaceutical innovation
Turning a corner?
The fifth annual study of the pharmaceutical industry’s performance in generating a return from its significant investment in R&D. The report allows industry leaders to understand the drivers of successful R&D strategies that are tangible and, most importantly, actionable.
Measuring the return from pharmaceutical innovation 2014, produced by the Deloitte UK Centre for Health Solutions, in collaboration with GlobalData, analyses the R&D returns of the 12 largest life sciences companies by R&D spend.
· 143 products launched globally since 2010 for the benefit of patients, with projected lifetime revenues of $995 billion.
· 236 assets with forecast lifetime revenues of $1,171 billion progressed to late stage development, since 2010.
· Rate of return has increased for the first time since 2010, to 5.5%.
· Cost of bringing an asset to market rises for the fifth year, to $1,401 million.
Strategic factors impacting R&D returns
Company size – the larger the company, by revenue or R&D spend, the greater the cost to develop each asset and the lower the returns.
External innovation – for 75% of the companies, less than half of the projected revenue is from compounds discovered in their own laboratories. Across all 12 companies, 58% of forecast revenues from innovation at the latest stage of development is sourced externally.
Portfolio focus – an emphasis on fewer therapy areas appears to deliver better returns.