Director’s Corner

February 8, 2018

Analyzing the Past to Predict the Future of Pharmaceutical R&D

Since 2010, Deloitte has analyzed the performance of biopharma R&D and the linked report is their most recent analysis. Drug discovery remains costly, complex and challenging and novel approaches are needed to better create value for patients and investors. Harnessing new technologies is a component, as are new discovery and development strategies, often made feasible as a result of technological advances. Additionally, these costs and complexities are leading biopharma to increasingly partner with academia, public research institutions, and private foundations, as well as tech companies (both established and start-ups) and other pharma to turn the tide back in favor of greater innovation and impact.
Jim Audia

A new future for R&D?

Measuring the return from pharmaceutical innovation 2017

Deloitte Centre for Health Solutions   |   © 2017 Deloitte LLP. All rights reserved.

Executive summary

Drug development continues to be challenging, complex, costly and time-consuming. This coincides with a growing tidal wave of confounding communicable and non-communicable diseases that threaten global public health. Although there are promising platforms emerging to tackle these complex diseases, the challenge will be to develop these platforms in an accelerated, e cient way to create near-term value for all stakeholders. It will require a transformed model that involves new paradigms for drug development and emerging technologies.

Since 2010, our series Measuring the return from pharmaceutical innovation has provided insight into the state of R&D in the biopharma industry. Speci cally, we estimate the return on investment that 12 large cap biopharma companies might expect to achieve from their late-stage pipelines. For the third consecutive year, we also include an extension cohort of four mid-to-large cap biopharma companies in our analysis. The internal rate of return (IRR) that we calculate serves as a proxy to measure the industry’s ability to balance investment (initial and ongoing capital outlay) with the cash in ows (drug sales) biopharma companies are projected to receive as a result of this investment. It also provides a basis for discussion and debate between payers, Health Technology Assessment groups and the biopharma industry, to help determine the value for money of innovation.

In analysing our results, we explore strategies used across the industry to maximise IRR, either by reducing the costs of R&D or by maximising the value of late-stage pipeline assets. This year, we also use a wider lens to look to the future, analysing some emerging technologies that we predict will in uence the future of R&D dramatically. Overall, we aim to provide a view of R&D that helps biopharma companies overcome many of the challenges they face – and will continue to face – over the next several years as they strive to achieve a sustainable future, including bringing to market new medical innovations that demonstrate measurable value to patients. (…)

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Adapted (with modifications) from Deloitte Centre for Health Solutions.