The article shared in this issue is from Science Direct, collated and translated by the Amador Biomedical writing team.
Concerns
Between 2001 and 2020, R&D spending by large pharmaceutical companies grew by 6% per year;
From 2001 to 2020, large pharmaceutical companies launched a total of 251 new drugs, accounting for 46% of the total FDA approvals.
In the two decades from 2001 to 2020, the R&D efficiency of large pharmaceutical companies required an average of 61$600 million in R&D funding to successfully develop a new drug;
Nearly half of the large pharmaceutical companies fail to achieve positive R&D efficiency.
Summary:
How to improve R&D productivity has always been a huge challenge for the pharmaceutical industry. This report provides an in-depth analysis of the R&D investment, output, and results of 16 leading research-based pharmaceutical companies from 2001 to 2020 (20 years). The analysis shows that during this period, pharmaceutical companies' R&D spending grew at a compound annual growth rate of 6%, with an average of $6.7 billion per company. The 16 pharmaceutical companies studied1 have launched a total of 251 new drugs in the past 20 years, accounting for 46% of the total CDER-related FDA approvals. The average R&D efficiency of large pharmaceutical companies is that the total expenditure of each successful new drug is as high as 61$600 million. Nearly half of the leading pharmaceutical companies need to make up for the lack of R&D efficiency through mergers and acquisitions.
The core of the business model of leading pharmaceutical companies is to create and continue to provide new and patented drugs with innovative and medical value, so as to achieve commercial value growth from R&D. However, R&D productivity in the pharmaceutical industry – the ratio between the commercial value of a new drug and its R&D investment – has been a key challenge for the industry over the past two decades. With R&D ROI declining, the industry's business model is under unprecedented pressure.
It is estimated that the average R&D cost per new drug before it is officially approved is as high as $2.6 billion (in 2013 dollars), which can climb to $2.9 billion if Phase IV trials are included. Factors such as high turnover in the R&D process, long R&D cycles, and underutilization of drug discovery technologies all indicate that increasing R&D productivity is a daunting task for the pharmaceutical industry.
From 2000 to 2010, the market value of the top 20 pharmaceutical companies fell by 30%. Looking at the expected average peak sales per new drug, especially in the field of oncology, R&D outcomes (2000-2019) show a downward trend, mainly due to the relatively narrow market segment targeted by each new drug approval. It is generally believed within the industry thatThe decline in R&D productivity is mainly due to the increasing expenditure on R&D, with a large part of the cost coming from failed R&D projects. The decline in R&D productivity is embodied in R&D efficiency, that is, the ratio between R&D cost (input) and the number of new drugs created by R&D (output).
Recent survey data shows that the R&D efficiency of the pharmaceutical industry is gradually picking up. This positive trend may stem from a subtle shift in R&D timing and attrition. The advanced integration of human genetics and multi-omics technologies, the trend towards mechanistic studies in smaller patient populations, and the increasing "pursuit of drug truth" rather than "pursuit of program progress" may be key factors in breaking the "Eroom's Law" of rapidly declining input-output ratios for new drug development. In-depth understanding of disease biology and disease mechanisms, better target selection and validation, optimized pharmacokinetic and pharmacodynamic modeling, biomarkers, and patient stratification are all important factors driving the continuous improvement of R&D efficiency. In fact, in 2020 and 2021, the U.S. Food and Drug Administration's (FDA) Center for Drug Evaluation and Research (CDER) approved a large number of new drugs, which further confirms that R&D efficiency has not declined further. However, it is worth noting that only 37 new drugs in the industry received FDA approval in 2022, which is the lowest value since 2016, indicating that the industry still faces challenges and needs to continue to work to improve R&D efficiency and success rates.
Clinical pharmacology, as an important role in drug research and development, can enable researchers to better understand a certain disease, discover candidates and target drugs as early as possible, and promote drug development and marketing. On the other hand, it can more quickly grasp the pharmacokinetics, pharmacokinetics of pharmacokinetics, dose determination, biomarkers and other information throughout the drug development process. Translational science and quantitative pharmacology are important tools for dose selection and optimization, as well as patient selection.
Amador Biotech is a technology-driven CRO focused on translational science and clinical development. With in-depth research at the intersection of translational science, quantitative clinical pharmacology, bioanalytical and biomarker, and regulatory science, Amador's global team is equipped with advanced technologies to accelerate the development of new technologies across the technology platform.
In view of the current heated discussion on R&D productivity in the industry, the research report comprehensively analyzes the R&D performance of 16 leading pharmaceutical companies in 2020, benchmarked against sales. It aims to provide an in-depth analysis of how these pharmaceutical companies convert R&D investment into commercial profits, and systematically understand the business logic behind it. Through detailed data reviews, technology evaluations, and in-depth analysis, the study reveals the challenges that Big Pharma still faces in terms of R&D productivity. For a detailed definition of the study, the data, and the method of analysis, please refer to the information.