Deloitte: is life science R&D earning its investment?
3 December 2013
The largest pharmaceutical companies have performed well in terms of bringing new products to market but are struggling with diminishing returns on investment according to a study by Deloitte, and Thomson Reuters.
Deloitte and Thomson Reuters analysed the 12 largest life sciences companies by research and development spend for their ‘Measuring the return from pharmaceutical innovation 2013’ report.
Now in its fourth year, the report found that:
Julian Remnant, head of Deloitte’s European R&D advisory practice, said:
“While the number of compounds flowing through late stage development has remained stable since 2010, the total projected value of late stage pipelines has declined. Overall, R&D organisations are commercialising effectively, this has been particularly apparent over the last year. But they are failing to match this level of performance in other drivers of R&D economics, for example reducing the cost of success and boosting the rate of innovation. Companies need to maintain their current trajectory in terms of movement of compounds through the late stage pipeline and on to commercialisation. However, the pace of change in factors underlying the economics of R&D needs to accelerate for the sector to achieve sustainable returns.
“Although the projected average return has declined over the four year period, the cohort average hides wide variation at the company level. Five of the 12 companies recorded a projected R&D return of over 7% this year, indicating that the leaders in the cohort are weathering the storm.
“We have identified three areas where business leaders should focus to drive improvements in R&D returns: maximising the value of science by fulfilling genuine unmet need, cost-effectively with demonstrable value cases; preserving and developing talent in R&D; and harnessing the power of data analytics to enhance R&D decision making. These approaches go beyond simple value preservation and straight line cost reductions to improve R&D returns.”
Notes to editors
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The information contained in this press release is correct at the time of going to press.
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