According to a new report from Deloitte Center for Health Solutions, returns from R&D have fallen to their lowest point in nine years, dropping to 1.9% in 2018. This is largely due to the cost of asset development, which has steadily increased over the past decade to $2.2 billion in 2018, coupled with a simultaneous decline in asset sales. Peak biopharma sales fell 8.1% to $407 million in 2018.

Since 2014, although there has been a greater number of assets receiving a special status (i.e., Fast Track, Breakthrough, Orphan, Priority Review), on average, clinical cycle times have also increased. Factors that may help shorten cycle times include building expertise to improve efficiency of trials, using earlier end-points when acceptable by regulatory agencies and moving towards combination therapies.

While R&D returns fell, R&D spending increased, with companies investing $78 million in 2018, a 15% increase in basic R&D expenditures since 2010. The number of assets in late-stage pipelines also decreased to a new low of 159.

Specialized biopharmaceutical companies outperformed larger biopharma companies in 2018, despite their higher development costs, largely due to higher projected pipeline values.

Source: Deloitte

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