Deloitte and Thomson Reuters generated data on the late stage drug programs of the top 12 Big Pharma companies. The good news - more drugs were approved in 2011-12 (41) versus 2010-11 (32). The bad news - forecasted revenues 2011-12 cohort ($211 B) versus 2010-11 ($309 B) -- an almost 32% drop. The latter translated into a 7.2% R&D return. The average cost of development was pegged at $1.1 B (see previous post where that figure was reported as $1.9 B). The D-TR Report further notes that 22 late stage drugs died in 2011-12 as compared to 19 the prior year. This wiped away $73 B and $77 B of potential value respectively in those two years.
Deloitte's head analyst, Julian Remnant, noted that half of the top 12 companies experienced a decline in net value realized from product commercialization last year. This is exacerbated as goverments and third party payers exert downward pressure on prices -- or make it more difficult to get reimbursement without clear product benefits over existing competition. They suggest companies battle this challenge through better clinical trial design aimed at targeted patient populations to establish the clear comparative benefit.
In other words, companies need to show payers why they should buy the new drug by demonstrating enhanced clinical benefit to patients and or superior cost effectiveness in use. As Mona Lisa Vito might say, "Oh my God. What a f**king nightmare!" See Fierce Biotech.
Posted by Bruce Lehr Dec 5th 2012.
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