Returns on pharmaceutical R&D improving as pipelines revive

Print 10 December 2014
Ben Hirschler, Reuters

Dec 10 (Reuters) - Drugmakers are finally getting more bang for their scientific buck, with the rate of return on pharmaceutical research and development (R&D) increasing for the first time since 2010.

Overall R&D returns have improved to 5.5 percent this year from 5.1 percent in 2013, reflecting a modest uptick in productivity in company labs, according to the latest annual survey of the industry by Deloitte released on Wednesday.

The global pharmaceuticals sector needs to replenish its medicine chest after a wave of patent expiries that peaked in 2012, and the numbers show that pipelines are getting fuller.

So far this year the U.S. Food and Drug Administration, which acts as gatekeeper to the world's biggest market, has approved 35 new products, up from 27 in the whole of 2013 and close to the bumper 39 cleared in 2012, the agency's website shows. 

There are significant variations between companies, however, with the largest firms having the greatest development costs for each new medicine and the lowest returns on R&D investment.

The most successful of the 12 leading drugmakers assessed in the survey had an R&D return of 11.7 percent in 2014, while the worst-performing saw a negative return of 0.7 percent.

"There are signs that returns from pharmaceutical R&D are turning a corner," Julian Remnant, head of Deloitte's European R&D advisory practice, said.

"However, we continue to see a relentless rise in the costs to develop a new medicine -- this year to $1,401 million -- with little change to the billions of dollars of value lost from products failing in the final stage of development."

The companies analysed in the study were Pfizer, Roche, Novartis, Sanofi, GlaxoSmithKline, Johnson & Johnson, AstraZeneca , Merck & Co, Eli Lilly, Bristol-Myers Squibb, Takeda and Amgen.

Results for individual companies were not disclosed. 

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