From 2010 to 2011, 10 of the 12 drug firms that spend the most on R&D had declining Internal Rates of Return (IRR), which is the return firms expect on investment. The firms were Pfizer, Sanofi, Takeda, Roche, AstraZeneca, Merck, Novartis, GlaxoSmithKline, Amgen, Eli Lilly, Johnson & Johnson and Bristol-Myers Squibb. The collective IRR for the firms was 8.4% this year, down from 11.8% last year. The cost for the firms to bring a product to market grew 26.2% this year to average more than $1.0 billion. Late-stage product failures were offset by product commercialization at eight of the firms. Non-R&D costs did not rise at 10 of the firms in 2011, resulting in greater operating margins—funds that could be put back into R&D. The report suggests that collaboration, manufacturing efficiency and decisions about capital expenses could improve returns on R&D investment.

Source: Deloitte/Thomson Reuters