Pharmaceutical R&D productivity improves for the first time in years

While the return on R&D investment of biopharmaceutical companies has been disappointing since 2010 (with a notable exception in 2020 and 2021 due to COVID-19), productivity appears to have turned a corner in 2023.

A new report Deloitte found that between 2000 and 2019, the productivity of R&D spending had declined. While it had a brief boost in 2020 and 2021 due to the rapid development of COVID vaccines and therapies, the return on investment declined again in 2022.

Deloitte said the internal rate of return on pharmaceutical R&D rose to 4.1% in 2023, compared to just 1.2% in 2022, according to its assessment.

The report, “Unlocking the Potential of ai: Measuring the Return on Pharmaceutical Innovation,” assessed R&D efficiency by analyzing the top 20 biopharmaceuticals based on R&D spending.

Total R&D spending for these 20 companies increased to $145.5 billion in 2023 from $139.2 billion in 2022. At the same time, the average R&D cost to move an asset from discovery to launch was an average of 2,284 million dollars in 2023, the same amount as in 2022. .

Meanwhile, the group's expected average peak sales per pipeline asset fell to $362 million in 2023 from $389 million in 2022. The average peaked at $500 million in 2021 thanks to COVID assets.

However, due to the approval of high-revenue-generating therapies, overall cohort revenue increased 9.6% in fiscal 2022 to $719.2 billion from $656.2 billion in fiscal 2021.

Despite revenue growth in 2023, “improving productivity in biopharmaceutical R&D will never be easy given the need to balance efficiency (cost) and value creation (sales), each of which depends on multiple factors that can influence the drivers of change. Deloitte argues.

The firm adds that regulatory changes, the loss of exclusivity of many high-value medicines, inflation, scientific and technological advances and the increasing complexity of protocol design “are exerting significant pressures on the current R&D operating model.” .

One of the key ways to address these issues, according to Deloitte, is to pay more attention to artificial intelligence in the R&D process.

“The biopharmaceutical industry is on the brink of large-scale disruption driven by interoperable data, advances in artificial intelligence and analytics, open and secure platforms, and patient-centric care, which have the potential to deliver less expensive and more cost-effective drug development.” productive,” Deloitte says in your report. “When developing the business case for investment in digital technology and artificial intelligence, short-term costs must be balanced against long-term efficiency gains.”

Other ways Deloitte says R&D efficiency can be helped is through improvements in the clinical trial experience, better understanding of the strategic impacts of regulatory changes, engaging teams across the biopharmaceutical value chain from the beginning and looking beyond therapy areas that are already heavily saturated with development.