The value generated by a
dollar invested in pharmaceutical R&D has fallen by more than 70% in recent
years, and the industry is in worse shape than many realise.
They are some of the key
points to come out of a new study from the consulting firm Oliver Wyman, which
looked at the 450 new molecular entities approved by the US Food and Drug
Administration between 1996 and 2010. The report claims that this period covers
an 'era of abundance' from 1996 to 2004 and an 'era of scarcity' from 2005
to 2010, divided by the September 2004 withdrawal of Merck & Co's Vioxx
(rofecoxib).
The consultant notes that
there were striking differences between the two eras, firstly reflected in
fewer new drugs in 2005-2010 (22 NMEs approved) compared to 36 in the era of
abundance, a drop of 40%. It also points out the lower sales per new drug. Oliver Wyman states that
"to get a sense of the economic value created by each drug, the study used
a common industry metric", namely sales in the drug's fifth year on the
market, in constant dollars. Forecasts were used for treatments that have not
yet hit the five-year mark.
This figure dropped from an
average of $515 million for a single drug in the era of abundance to $430
million in the era of scarcity, a decrease of more than 15%. Taken together,
the impact of fewer drugs per year and lower sales per drug meant that the
average fifth-year sales produced by the industry as a whole went from $18.3
billion a year to $9.4 billion, a drop of almost 50%.
The report goes on to say that
even with recent reductions, R&D expenditures almost doubled over the study
period, from an average of $65 billion per year in the good times to $125
billion per year. However, "those dollars produced significantly less"
and in the era of abundance, drug companies made an average of $275 million in
fifth-year sales for every $1 billion they spent on R&D. In the era of
scarcity, the figure was $75 million.
Jerry Cacciotti, a partner at
Oliver Wyman, noted that "drug companies are clearly doing a lot of things
right” and "most have maintained strong net income levels". The
industry as a whole has grown at 6% a year for the last five years, but the
study "shows that in the activity that counts the most - bringing valuable
new drugs to market - the industry is in worse shape than has been publicly
acknowledged”, he added.
Mr Cacciotti said that now
pharma has clearly entered a different era, "R&D needs a new mindset
for drug development”. Drugs will "remain rare, strategy will be set differently,
the bar on innovation is higher and drugs must be used to reduce overall cost
in the healthcare system", he concluded.
Πηγή: Pharma Times
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