NEW
YORK, April 25, 2024 /PRNewswire/ --
Key takeaways
- Projected return on investment in pharma
research and development (R&D) in 2023 has risen to
4.1%, climbing back from 2022's record low of 1.2%.
- The leading 20 global pharmaceutical companies collectively
spent $145 billion on R&D in
2023, up 4.5% from 2022.
- Total sales revenue for the leading 20 global
pharmaceutical companies continues to trend upward,
increasing by 9.6% from FY2021 to FY2022.
- One-third of development programs targeted rare
diseases in 2023.
- Artificial Intelligence (AI) is yet to be a game-changer
in pharma R&D
Why this matters
Deloitte in a series of annual
reports on "Measuring the return from pharmaceutical innovation,"
in collaboration with other member firms, has provided insights
into the state of biopharma R&D since 2010. The
14th annual report analysed the current state of R&D
for 20 leading biopharma companies in 2023.
The analysis shows the average returns for the cohort have risen
to 4.1% in 2023, up from the 2022 record low of 1.2%. This follows
the 6.8% peak in 2021, which was driven by COVID-19 assets passing
through the pipeline.
R&D executives who were interviewed as part of the analysis
confirmed that R&D operating models continue to experience
significant pressures due to:
- Ongoing regulatory changes
- Impending and unprecedented scale of the loss of exclusivity of
high value assets
- Rapid pace of scientific and technological advances
- Rising protocol design complexity and costs of novel biomarkers
and diagnostics
Key quotes
"With 14 years of analysis to draw on, it's clear that
transformational change in R&D is needed to consistently drive
increased returns across the biopharma industry. Our related
research suggests that these organizations have an opportunity
to unlock $5 to 7 billion in value
with R&D representing the top value opportunity at 30 to 40%.
There is real potential to drive down development costs, increase
speed to market, and unlock a new era of R&D productivity."
— Pete Lyons, U.S. life sciences sector leader,
and principal, Deloitte Consulting LLP
"The increase seen in the Pharmaceutical Innovation Report 2023
analysis is certainly encouraging, but sustaining the flow of
high-quality assets into the late-stage pipeline tends to be a
challenge. Companies should continue to sufficiently invest in
early R&D, through both traditional and AI-enabled approaches,
to drive innovation, and remain ruthlessly focused on execution to
help accelerate development timelines. By analyzing trends over
time, we offer a breadth of industry experience to life sciences
clients who are leading life-changing R&D."
— Kevin Dondarski, life sciences R&D strategy
leader, and principal, Deloitte Consulting LLP
Pharma fears regulation may stifle innovation
In
total, the 20 companies analysed spent $145.5 billion on R&D in 2023, an increase of
4.5% compared to 2022 ($139.2
billion). This rise in R&D costs can be attributed to
several factors, including more complex trial requirements,
regulatory changes, the impact of inflation, and continuing to
operate in functional silos.
R&D executives were more concerned with changing
regulations than rising R&D costs and increasing cycle times.
For example, executives indicated that the U.S. Inflation Reduction
Act (IRA) may stifle innovation because the incentives will be
lower and profitability will be reduced, suggesting that biopharma
companies may take fewer and smaller risks when progressing assets.
Interpreting the new and evolving regulatory expectations and
implementing any necessary changes in a coordinated, cost-efficient
and timely manner, across a number of business functions, appears
to be a significant challenge for the industry.
AI strategies and adoption are in early
innings
While Deloitte's related research indicates
transformative value can be gained with AI, R&D executives
interviewed as part of the Pharmaceutical Innovation
Report indicate that efforts to improve R&D efficiency
through digitalization and automation are still in their infancy.
In 2023, half of the clinical development programs involved
biologics and advanced therapies, including cell and gene
therapies, monoclonal and recombinant antibodies, protein and
peptide therapies, and plasma-derived therapies. Advanced therapies
have created challenges for regulators and pharma companies in
agreeing surrogate endpoints, and also in design, manufacturing and
supply complications in the conduct of the trials themselves. The
R&D executives interviewed believe AI can accelerate the
creation of these treatments.
Methodology
"Measuring the return from pharmaceutical
innovation 2023," is the 14th annual report led by
the Deloitte UK Centre for Health Solutions, the research arm
of Deloitte UK's Life Sciences and Health Care practices, in
collaboration with the Deloitte US Center for Health Solutions. The
report explores the performance of the biopharmaceutical industry
(biopharma) and its ability to generate returns from its investment
in innovative new products.
Since 2010, the "Measuring" the return from innovation series
has tracked the projected return on investment from the late-stage
pipelines from an original cohort of 12 leading global biopharma
companies. During that time the cohort has expanded and today the
leading 20 global pharmaceutical companies are tracked using the
same comprehensive and consistent methodology.
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SOURCE Deloitte