The cost of developing new drugs has increased dramatically whilst the number of drugs in late-stage development has continued to decrease.
According to a new report by professional services firm Deloitte on the world’s 12 largest pharmaceutical companies, the average cost of bringing a product to market rose by more than 25% to more than $1bn (£630m) this year, from $830m in 2010.
Meanwhile, the number of drugs in late-stage development dropped from 23 to 18. Ten of the 12 companies have also experienced a drop in returns from research and development (R&D), going from 11.8% last year to 8.4% this year.
Julian Remnant, head of Deloitte’s European R&D advisory practice, said that the news was not all bad: “While this picture reflects a snapshot of the very real productivity challenges the industry is facing, it belies some underlying successes. Of the 12 companies we analyse each year – the top 12 research-based pharmaceutical companies globally – nearly two-thirds succeeded in realising more value from product commercialisation than has been lost from late-stage product failures.
“Also, across the 12 companies, non-R&D costs have declined, resulting in a higher operating margin – which helps to free up cash flow that could be reinvested in R&D.”
The figures do however point to a need for pharmaceutical companies to find more cost-effective ways to develop and market their products in order to maximise on returns.
One way to do this would be to practice more digital marketing, where products can be promoted for relatively little cost but to a very wide audience.