Return on investment for research and development costs in the pharmaceutical industry is at its lowest level since 2010, according to Deloitte's 10th annual ROI of R&D report, released Dec. 18.
By looking at data from the top 12 global pharmaceutical companies, collected by Deloitte's Centre for Health Solutions, the study found that projected return on investment for research and development was 1.8 percent in 2019, the lowest level since the company began tracking the numbers in 2010, when ROI was at 10.1 percent. It's a slight fall from last year, when the number was 1.9 percent.
Forecasted peak sales per asset also declined to $376 million, down from $407 million in 2018.
However, the average cost of developing a new drug also dropped to $1,981 million, compared to $2,168 million in 2018. The estimate included the cost of failure and took into account the number of drugs in late-stage development. The decline in average cost to develop a new drug reverses four years of increases, according to Deloitte.
The decline in peak sales is in stark contrast to the increase in research and development expenditure, which Deloitte said indicates that companies are taking longer than ever to move drugs through the research and development process.
"No other industry would operate on such low R&D returns, so we have used this tenth anniversary report to examine the lessons from the past as well as identifying some of the solutions that will be needed over the next ten years if the industry is to thrive," said Karen Taylor, director of the Deloitte Centre for Health Solutions.
Ms. Taylor added that "substantive change is needed, especially in shortening research and development cycle times."
Read the full report here.
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