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Measuring the return from Pharmaceutical innovation 2012

Is R&D earning its investment?

Measuring the return from Pharmaceutical innovation 2012 (PDF)


Background

This Deloitte report is the third in an annual series exploring the pharmaceutical industry’s performance in generating a return from its investment in new product innovation. For the last three years Deloitte and Thomson Reuters have analysed the performance of the top 12 life sciences companies by estimating the projected financial returns from the investment in their late stage pipelines. The cohort of companies comprises the 12 publicly-listed companies reporting the highest absolute research and development (R&D) spend for 2008-2009. The late stage pipeline includes those compounds which are either in Phase III development or submitted for approval.

Key findings

This year’s research highlights:

  • Internal rate of return falls for the second year to 7.2%, but the decline is stabilising
  • The number of new compounds entering the late stage pipeline has more than doubled (from 35 new compounds in 2010-11 compared with 78 new compounds in 2011-12) – 123% increase
  • The value of new compounds entering the late stage pipeline has almost doubled (from $193 billion in 2010-11 to $378 billion in 2011-12)- 96% increase
  • While the number of approvals has increased by a almost a third (from 32 to 41), the total forecast sales revenues of all approvals has declined by a third from $309 billion to $211 billion
  • While total number of compounds in cohort late stage pipelines has remained constant (207 in 2010 and 195 in 2012) total estimated forecast sales revenues of cohort late stage pipelines have declined ($1,369 billion in 2010 down to $1,049 billion in 2012).

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Download Measuring the return from Pharmaceutical innovation 2012 (PDF)

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