R&D returns, the balance between research investment and cash inflows from drug sales, in the pharmaceutical industry have continued their decline since 2010, dropping to 3.2% in 2017, a 0.5 percentage point decrease from 2016 and 6.0 percentage point decline from 2010. This decrease in R&D returns averages to an approximately one percentage point drop each year, a point of concern for the industry. In contrast, the cost of bringing an asset to the market has doubled since 2013, jumping over 110% to $2.173 billion in 2017.

Projected peak sales per asset, which have declined by over 50% between 2010 and 2016, grew 18.5% from 2013, reaching a blockbuster level of $1.128 billion. Smaller, mid-tier pharmaceutical companies continued to outperform larger companies in 2017, with a 9.9% increase in projected returns to 11.9% in 2017.

The development of cancer therapies have been on a steady rise over the last 8 years, with late-stage pipeline revenue for oncology for the top 12 pharmaceutical companies jumping from 18% in 2010 to 37% in 2017. However, the growing development of cancer therapies is not without its challenges; there is a lack of eligible and accessible patients to participate in and complete the large number of clinical trials required within the given timeline. Also, many immunotherapies are effective only for a specific set of cancers and in a subpopulation of people who have those cancers.

Recommendations for remedying R&D productivity include incorporating artificial intelligence for improving study designs, wearables and connected devices for refining the method in which patients participate in clinical trials, and utilizing crowdsourced input in clinical trials to encourage patient retention.

Source: Deloitte