Fierce Biotech reports this morning that the Office of Health Economics (UK think tank) says that the average cost of developing an approved drug has risen from $199 M in 1970 to more than $1.9 B today. They cited four factors for this:
- Soaring out of pocket R&D costs
- A success rate that has been halved from 1:5 to 1:10
- A vast increase spent in clinical trials up from 6 years to 13.5 years
- Significant increase in cost of capital due to increasing regulatory complexity
Not everyone agrees with this of course, but if taken at face value the results are sobering. The Financial Times after looking the report over said that the increase to 13.5 years alone was enough to scare off venture capitalists for good.
Posted by Bruce Lehr Dec 2nd 2012.