A new future for R&D?

Measuring the return from pharmaceutical innovation 2017

The pharmaceutical industry continues to face an extremely challenging research and development (R&D) environment and has yet to turn a corner in terms of its R&D value proposition. Despite this, the Deloitte UK's report presents an optimistic road ahead for R&D and business leaders, exploring the emerging technologies that have the potential to dramatically transform the productivity and efficiency by which drugs are discovered, developed, and brought to patients.

Key findings for top 12 large-cap biopharma

• R&D returns have declined to 3.2 percent, down from 10.1 percent in 2010
• It now costs these companies almost $2bn to bring a drug to market
• Projected peak sales per asset decreased by more than half between 2010 and 2016 but have increased by 18 percent in 2017
• This year’s uptick in costs and sales per asset is due to the drop in the number of assets in late-stage pipelines—from 189 in 2016 down to 159 in 2017.

How are biopharma R&D returns faring?

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Other key findings

• Smaller firms outperform larger peers: Since 2015, in addition to the 12 companies included in the original cohort, four mid-tier biopharma companies have also been added to the study. These continue to out-perform the original pharma cohort, with projected returns of 11.9 percent in 2017 (up from 9.9 percent in 2016), but are still below the high of 17.7 percent set in 2014.
• Rise of cancer therapies: From 2010-17, the percentage of forecast late-stage pipeline revenue from oncology for the top 12 companies has increased significantly, from 18 percent in 2010 to 37 percent in 2017. High levels of unmet medical need and higher potential returns are attracting companies.
• Emerging technology and new drug development paradigms offer promise: Emerging technologies such as artificial intelligence, real world evidence (RWE), and new clinical trial models have the potential to transform how drugs are discovered, developed, and brought to patients.

How digital technology is transforming the future of R&D

Despite many challenges with biopharma R&D, there are numerous examples of innovation that demonstrate pharma’s resilience and optimism about the future—from the approval of numerous immunotherapies to the first ever approvals of chimeric antigen receptor T cell (CAR-T) therapies this year.

Furthermore, there are a range of advanced technologies that have the potential to transform R&D across the entire value chain. Biopharma companies are just starting to experiment with these technologies, and early adopters will reap the rewards of a much more efficient R&D process, improving both the quality of assets and the time and cost it takes to get them to market.

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