The Big Red Biotech Blog

Marketing vs. R&D Spend Debate in BIG Pharma

There has been an interesting (though not new) debate this week on In the Pipeline about whether Big Pharma actually spends more money on marketing its products than on developing them. Many of the detractors for this industry think much more is spent on the former -- as if Big Pharma were purely a bunch of hucksters. 

This morning In the Pipeline produces some data from 2010 that bascially indicates about 2x is spent on R&D as is spent on marketing.  This should end the debate.  Anyway, I'm not sure why critics would think that a company would take the time to develop its products but not to market/sell them?  Why should pharma be any different than other industries?  I guess if you believe pharma actually spent 10x on marketing compared to development, you might have some sort of point, but short of that I'm not sure what that point might be.............are critics really suggesting pharma is just selling snake oil?  Seems far-fetched doesn't it?

Posted by Bruce Lehr May 23rd 2013.

Pharma R&D Spending vs Other Industries

Here's an interesting post from the In the Pipeline blog that comments on the amount of R&D spending that is seen in Big Pharma versus what occurs in all sorts of other industries.  It turns out that Big Pharma spends more as a percentage of sales than any other industry besides semi-conductors.  That is eye opening to a degree -- eh? 

The post also provides a link to the Booz study that was the source of this information and lays out R&D spending for a host of industries.  It is a good reference piece to have I'm certain.

Posted by Bruce Lehr May 20th 2013.  

Global Biosimilar Market Report 2013

Visiongain published a new report on the global biosimilar market in 2013 and says the market size will reach $2.45 B, or approximately 20% higher than last year. Biosimilars now account for about 2% of the biologics market. 

PharmTech Talk » Global Biosimilars Market to Reach $2.445 Billion in 2013.

Monoclonal antibodies and insulin submarkets are expected to grow fastest for biosimilars over the next 10 years and should acont for 57% of the 2023 biosimilars market. Biosimilar erythropoietin and filagrastim are also expected to have increasing impact.

Said pharma industry analyst, James Evans, "Biologics are going to become so prevalent that every major company will be interested in having a stake in that expanding market."

Emerging markets, particularly China and India, have been leaders in biosimilars, accounting for the majority of global revenues in 2012.  By contrast, the US, EU and Japan combined only made up 20% of the market. Visiongain predicts the pace will pick up in the developed markets from 2013 to 2017 as many of the biggest blockbuster mAbs come off patent.

Posted by Bruce Lehr May 16th 2013.

The Outcomes Era

Here's another post on the importance of "outcomes" research in gaining acceptance for a new drug.  It quotes results from a new Camelot Management Consultants study -- where 60% of US and European companies agree outcomes research to show the effectiveness of a new drug is important in gaining acceptance --- yet disturbingly 30% say they don't plan to change the way the go about launching their products.

The Outcomes Era .

Camelot says new launches will have to have the following features:

• Aim at expanding the market not just take share
• Re-define therapy guidelines
• Develop smarter pre-launch activities, with more investment in early phases
• Have stakeholders awaiting product and its differentiating features at launch
• Win recognition for creating multi-shareholder value (i.e. patients, prescribers, payers)
• Adapt to changes in the environment during and after the launch

Posted by Bruce Lehr May 16th 2013.

 

US Drug Market Contracts for First Time - EVER!

As Fierce Biotech reports via IMS data, te US drug market shrunk by 1% in 2012.  This is the first time that has ever happened. This is due, of course, to the much talked about patent cliff arriving in a big way -- mpacting market share and revenues of some of the world's top selling small molecules. The US market is now down to $325.8 B. 

Patent cliff drugs took a $29.8 B dollar hit. Yes, with a Big B.  Branded producers in general saw revenues decline by $11.8 B.  Generics producers of course saw he upside of things as their sales increased by $8 B. A drug market Yin and Yang as it were. Generics now account for 84% of all drugs prescriptions dispensed in the US.

The bright side for branded manufacturers are for their new drugs (< 24 months old). These actually grew by $0.5 B to a total of $10.8 B.  These all fell into the specialty category with drugs like - Incivek (hep C), Eylea (macular degeneration), Xgeva (bone drug), Gilenya (MS), and Yervoy (melanoma).  At least the FDA is on an upward trend with approvals, so there may be hope for a continued flow of more new drugs to bolster brand name revenues. 

However, the next wave over the patent cliff is also still coming.  Here's a report from the end of last year in Fierce Biotech that outlines the next 15 top sellers to go off patent this year.

Posted by Bruce Lehr May 9th 2013.

 

 

 

R&D Spending may not be ALL Bad

Fierce Biotech yesterday reported that R&D spending was up as many significant biotechs -- like Gilead, Amgen, Celgene, Shire, Regeneron, Onyx and Biomarin.  In other words, many of the darlings of biotech investors -- companies who have experienced significant share price appreciation of late. Overall, the top 10 biotechs spent $11.8 B on R&D in 2012 -- nearly a 15% increase over the prior year.

So while it may be very trendy in Big Pharma to be trimming the internal R&D budget in favor of seeking outside collaborators or properties to fill the pipeline, focused, smart R&D spending in biotech seems to be working.  That suggests R&D spending is not inherently BAD as you could be led to believe if you spent all your time listening to Big Pharma CEOs and their R&D Heads. Rather, R&D appears to require focus with spending on the right projects at the right time -- while minimizing waste -- not eliminating the budget.

This suggests that the top 10 biotechs will continue to thrive and may well find themselves to be the well sought after beauties at the ball. That means possible acquisitions, partnerships or licensing deals on the horizon -- and expect the Big Pharma guys to be the callers.

Posted by Bruce Lehr May 9th 2013.

Biotech Needs to Focus on Demonstrating Product Value

According to a recent Ernst & Young study, future success in launching and selling new drugs will increasing depend upon the Company's ability to "show value" for its product -- i.e. comparative effectiveness.  This recognizes the increasing reality that to be successful -- you don't only need regulatory approval (FDA, EMEA, etc) but also it is critical that you get 3rd party payer approval in a timely manner to support launch.  Otherwise, you can look forward to lagging sales -- which can lead to a dramatic collapse in stock price and threaten a "one-hit" wonder Company's very existence.  See Dendreon's Provenge as a poster child for this effect -- though there are others like HGS' Benlysta.

PharmTech Talk » Biotech Needs to Focus on Demonstrating Product Value.

Curiously, the E&Y study found that small and mid-size biotech's in particular seemed blind to this possibility.  While 94% agreed that it is “important” or “very important” for biotech companies to have a strategic focus on matters of evidence. most companies indicated that they are unlikely to undertake specific evidence-focused initiatives. Of the respondents who rated evidence measures as “important” or “very important,” 11% have added payer/reimbursement expertise to their management teams, 13% have brought such expertise to their clinical development teams and only 4% have included people with such expertise in their boards of directors. 

E&Y advised biotech companies to debunk any myths that are holding them back, stressing that the shift to evidence is happening faster than anticipated, and it will affect companies regardless of their size, maturity or disease focus

You know what they say about failure to learn from history and impending doom to repeat it? 

Posted by Bruce Lehr Apr 26th 2013.

M&A Activity - Usual Suspects

Fierce Biotech reports on latest Moody analyst's take on M&A activity for 2013 in the pharma industry. The news was similar to predictions that I've seen for the past couple of years -- that being a few cash flush Big Pharma players will be looking for bolt on acquisitions from the biotech flock to bolster their pipelines -- to help fill in lost sales due to patent expirations within the existing product portfolio.

Potential big acquirers on the latest list included: Pfizer, Novartis, Roche and AstraZeneca. Their purposrted prey might include these analysts favorites: Theravance, Onyx Pharmaceuticals and Cubist Pharmaceuticals. There is no particular word out there that this is actually happening as we speak but these companies have profiles the analysts love to love as acquisition targets due to their relatively smaller size, existing commercial products and current pipelines.

In the past (May 2011), rumors have circulated that AZ was interested in buying Cubist for its antibiotics versus MRSA.  So some of the candidate deals on the table are not new notions -- at least for analysts.

Posted by Bruce Lehr Apr 23rd 2013.

VC Deals - especially Life Science - Have BAD 1st Quarter

New reports from PricewaterhouseCooper (MoneyTree Report) and National Venture Capital Association (Reuters data) show that VC investment in Qtr 1 2013 dropped 12% by dollars and 15% by number of deals as compared to Qtr 4 2012.  In a Qtr over Qtr comparison with Q1 2012, the amount of dollars invested this Qtr was down 6%. 

VC funding was therefore $5.9 B for 863 deals in Qtr1 vs $6.7 B for 1013 deals in Qtr4.  Life Science specific investment fared even worse - with $875 M for 96 deals versus $1.3 B for 138 deals in Qtr 4.  That represented a 33% drop in dollars and 30% drop in deals. Even worse, first-time deals dropped 52% and garnered only $98 M dollars for 20 companies, the worst performance since Qtr 3 1996 and Qtr 2 1995 respectively. See Fierce Biotech.

If there is a silver lining (and maybe there is), some speculation exists as to whether more companies are preparing for IPOs, as 175 IPO filings have been submitted to the SEC for review. This is discussed extensively in Xconomy. 

Posted by Bruce Lehr Apr 19th 2013.

Surprise! Surprise! Big Biotech's Outdo Big Pharma on Several Measures

As reported in Fierce Biotech, Burrill & Co did an analysis comparing biotechs to pharma over the past 3 years.  Biotechs emerged as the winner on several key measures.  Companies in the Big Pharma camp included J&J, Pfizer, Novartis, Merck, Roche, Sanofi, Novo Nordisk, GSK, Bayer, Lilly, AZ, and BMS.  Under the biotech tent, we had Amgen, Biogen, Gilead, Celgene, Alexion, Regeneron. Shire, BioMarin, Elan and Onyx. 

Key findings as reported by Fierce for the past 3 years, included:

• Value of biotech group up 57% to 17.4% by pharma
• Net income for biotech's were up 23.8% compared to 1.1% for pharma (OUCH!)
• Revenue was up 40.6% in biotech versus 17% for big pharma.  Actual revenue was $48.6 B total vs $526.8 total. So pharma is still more than 10x larger in aggregate
• R&D spending went up 38.8% for biotech ($10.3 B) as compared to 11.7% for pharma ($76.3 B). Here pharma is only 7x in size.  Is that a good thing given their returns on R&D of late?

Biotech's are clearly offering better results for their investors at the moment but are they just smaller and at an earlier stage of hitting the "pharma wall".  Don't know. We'll find out.

Posted by Bruce Lehr Apr 17th 2013

Top 10 Companies for New Drug Approvals Over Past 10 Years

Fierce Biotech via Mathew Herper's column in Forbes, reports that J&J had the most drug approvals in the 10 year period ending in 2012. This is one measure of R&D pipeline success (personally I'd like to see the amount of revenue generated from these drugs as the lead measure). Regardless, here's the score:

• Johnson & Johnson 13 approvals
• Pfizer + Wyeth  13
• Merck + Schering Plough 12
• Roche + Genentech 12
• GlaxoSmithkline 11
• Sanofi + Genzyme 11
• Novartis 10
• Bristol-Myers Squibb 9
• Amgen 5
• Bayer 5

I'm representing the ranking slightly differently than either the Forbes or Fierce Biotech article as I've combined the production of companies that have themselves combined through M&A activity.  This makes a large difference for companies like Pfizer, Sanofi and Roche.

Posted by Bruce Lehr Apr 16th 2013.

 

Biotech Top 10 Revenue Stragglers

Fierce Biotech today published the top 10 new drugs with sales that lag the analysts' bullish pre-launch estimates. This ranking was based on drugs launched in the past 5 years that had been projected to earn blockbuster status.  Unfortunately, thus far they have not and have not likely prospects for doing so:

• Pfizer's Relistor - Projected $865 M and Actual $37 M
• Intermune's Esbrist - Projected $917 M and Actual $132 M
• Vertex's Incivek - Projected $4.05 B peak and new peak $669 M
• Amarin's Vascepa - Projected peak $2 B and new $505 M
• GSK's Benlysta - Projected peak $2.8 B and new $696 M
• Takeda's Nesina - Projected $2.53 B peak and new $788 M
• AZ's Brilinta - Projected $2.52 B and new $865 M
• Amylin's Bydureon - Projected $1.66 B and new $615 M
• Vivus's Qysmia - Projected $1.13 B and new $437 M
• Genentech's Actemra - Projected $2.25 B and Actual $896 M

This proves that analysts are too bullish, and tend to overestimate the mark (a lot like marketing research).  It may also be reflective of a changing healthcare environment that wants to see actual value for its expenditures.  If you can't be what's already on the market cost effectively, then we don't want to buy it.

Posted by Bruce Lehr Apr 10th 2013.

New Drug Annual Report from PhRMA

Below appears the 2013 Report from PhRMA on the industries pipeline of new biologic drugs. This overview outlines drugs by therapeutic category, by clinical phase and by company. There are 907 biologics in development covering more than 100 diseases.

 Download Biologics2013 

The major category level includes: 338 drugs for cancers, 176 aimed at various infectious diseases, 71 at automimmune diseases, and 58 at cardiovascular disease. Other disease categories inclue diabetes, digestive disorders, genetics diseases, neurologic and respiratory diseases.

Posted by Bruce Lehr Mar 25th 2013.

Top Pharma R&D Spenders in 2012

The latest market report from GEN shows the top R&D spenders in the industry in 2012 as follows:

• Roche         $10.1 B (up $1.3 B with restructuring costs)
• Novartis      $9.3 B
• Merck         $8.2 B
• Pfizer         $7.9 B (down $1.2 B)  
• J&J            $7.7 B
• Sanofi         $6.4 B
• GSK            $5.95 B
• Lilly            $5.3 B
• AZ              $5.24 B
• AbbVie        $4.3 B

Total spend for the group wwas $70.37 B in 2012 versus a slightly higher $70.38 B in 2011.

Posted by Bruce Lehr Mar 18th 2013.

 

Eight of Top 20 Drugs in Sales are Biologics

This from The Cell Culture Dish (via GEN) shows the Top 8 biologic drugs in 2012.  They ranged from $4.0 B to $9.26 B, and all grew in sales in 2012. The stats appear below:

• Humira        $9.26 B    AbbVie
• Remicade    $8.22 B    Janssen & Merck
• Enbrel         $7.96 B    Amgen & Pfizer
• Rituxan       $7.29 B    Roche & Biogen Idec
• Lantus         $6.65 B    Sanofi
• Herceptin    $6.40 B    Roche
• Avastin        $6.26 B    Roche
• Neulasta      $4.09 B    Amgen

Roche and Amgen look like the leaders in the clubhouse. And of course, AbbVie's Humira took over title of top selling drug in the World.

Posted by Bruce Lehr Mar 18th 2013.

High Drug Pricing Next Industry Challenge?

The good news from 2012 might be that more drugs were actually approved (39) than in the very recent past -- but the bad news is that many were VERY expensive.  Xconomy's Luke Timmerman did a nice piece summarizing this a couple of days ago.  It seems that many of the very high priced drugs are coming into the oncology and "rare disease" or orphan arenas.  Many of these drugs carry price tags into the serious 6 digits and are $300K or more annually.  Is this sustainable?  Are any of these products worth it?

Those are questions that the industry must face as healthcare systems around the world struggle with costs.  Individual patients oft times may have to struggle as well depending on what type of insurance coverage they carry.  And even in the industry, some players must worry that the action of their peers might be in danger of killing a golden goose if these prices are perceived publicly -- even by physicians -- as being out of line with reality. 

What's a drug worth?  One answer might be what the market is willing to pay.  But will that number change as government and other third party payers become budget constricted. Yes, is the obvious answer.  From a payers perspective, they want a price that they feel is commeasurate with the benefits that are received.  Same from a patient's perspective, I hope.  Do I feel I got my money's worth in terms of improved health or quality of life? 

There is no doubt that this issue will not go away. 

Posted by Bruce Lehr Feb 13th 2013.

New Drug Approvals in 2012

Here's a quick piece from CEN-Online that overviews and discusses the 39 new drug approvals by FDA in 2012.  The good news is that we have seen a 2 year trend now where more drugs have been approved than in the recent past.  This may say that changes being made to R&D departments throughout the industry are starting to have an effect but more than likely it is too early to make such a statement -- however at least the trend is "good". 

It does appear that the relationships between FDA and the drug companies have improved and there is better information sharing and collaboration.  A troubling trend has been developing though with pricing and this may be the next hurdle that needs to be addressed in the industry and among goverments and payers -- not to mention patients and physicians.

Posted by Bruce Lehr February 13th 2013

 

A Real Cluster

Here's the new 2012 report on Life Science Clusters issued by Jones Lang LaSalle.  It highlights biotech clusters around the globe.  This year's top 10 ranking in the US follows with the change from last year's ranking in parentheses:

1. Greater Boston (no change)
2. San Diego (+5 spots)
3. San Francisco Bay area (no change)
4. Raleigh-Durham (+5 spots)
5. Philadelphia (+1 spot)
6. Washington DC metro area (-1 spot)
7. New Jersey/New York city (-5 spots)
8. Los Angeles/Orange county (-4 spots)
9. Minneapolis-St. Paul (-1 spot)
10. Seattle (no change)

Three major trends were cited in the report to account for some of the movement:

• M&As and growth of middle-market life science companies are benefiting smaller metropolitan areas
• Proximity to innovation -- including intellectual capital -- is more important than ever
• Build it (labs) and they will come -- states are agressively competing for life science as economic drivers for their region

You can access the whole report here - Download Life Sciences Cluster Report_Global_2012 

Posted by Bruce Lehr Feb 8th 2013

Actual Companion Diagnostics Sighting!

Xconomy published today on Qiagen's recent application to the FDA for the approval of a diagnostic test that looks at a mutation in the EGF receptor.  The test is useful in the diagnosis of the speed of disease spread in non-small cell lung cancers (NSCLC) -- 10 to 15 percent of Caucasions and 40 percent of Asians carry the mutation.  The test was developed in conjunction with Boehringer Ingelheim's cancer therapy, afatinib that targets the mutation -- and they've asked the FDA to approve both products simultaneously.

This type of "companion diagnostic" has long been talked about, particularly with cancers, as being advantageous to define the target patient population that will respond to the drug. This helps recruitment for clinical trials and to better ensure the drug will actually be effective in the trial. The proto-type for this concept is Roche's combination Herceptin and the HER2 positive breast cancer from the late 90's. But not much else has really reached the market since then.

With Qiagen's/BI's application, we expect to see a new surge in companion diagnostics-therapeutic combination being developed and brought forth. In fact, co-development of the therapy and the diagnostic is the major difference in these programs now compared to what may have been done in the past where a test was typically developed sometime well after the therapy was available.  The result is that the tests didn't work particularly well and only 1% of drugs in the US actually have a companion diagnostic -- most in cancer area.

That's changing as the FDA has encouraged this approach.  Qiagen says it now has 15 programs in progress -- including with not only BI -- but with big companies like Pfizer and AZ. Last year, Roche had a companion diagnostic it developed with its Zelboraf treatment for melanoma. Pfizer's Xalkori has a companion diagnostic developed by Abbott. Other drug-companion diagnostic programs in progress include the following companies:

• Synadex Pharmaceuticals and Ventana Medical with entinostat & NSCLC's 
• Seattle Genetics/Takeda and Ventana Medical with Adcetris & hopefully various cancers
• Qiagen and Bayer with tests therapies and tests for solid tumors
• Qiagen also has a similar deal with Pfizer
• Astellas Pharma and Roche with Tarceva and lung cancers

The industry and FDA are looking for more of these to be successful -- and would expect clinical trials to flow more smoothly and result in more approved drug applications. It remains to be seen if this will translate into reality -- though the promise is clearly there.

Posted by Bruce Lehr Jan 31st 2013.

 

Orphan Drugs Good Business

I like to publish market research, data and facts to this site -- because they often interest me and it make it easy for me to find the information again in the future with the indexes. 

I pulled this data from a GEN article by Gail Dutton that cites a Thomas Reuters study as the original source.  The thrust of the article is that making orphan drugs makes good economic sense now.  As a reminder, an orphan drug (in US) is one directed to a disease that affects fewer than 200,000 people, in Europe it is to a disease with an incidence lower than 5 in 10,000.  The EMA recognizes 8,000 rare diseases and the FDA 6,000. 

Since the Orphan Drug Act was passed in 1983, the FDA has approved 350 new drugs to about 200 diseases. Orphans grew at a CAGR of 26% between 2000-2010 versus a 20% CAGR for non-orphans. Orphans account for approximately 22% ($50 B) of total drug sales.  It's further interesting, orphan drugs (developed and filed) have a 93% chance of success versus 88% success rate for non-orphans. It pays to be in a niche by yourself. The PV for the two drug types are virtually the same as well $637 M per year and $638 M per year respectively.

Companies (e.g. Shire, Genzyme, Biomarin) with Orphan Drug Business models are successful now and that would seem to be the case for the immediate future too.  Here's the list for the Top Selling Orphan drugs:

• Rituximab                    Oncology
• Ranibizumab                Opthamology
• Somatrophin                EPR, metabolism
• Lenalidomide               Oncology
• Imatinib mesylate        Oncology
• Filgrastim                    Hematology
• Glatiramer acetate       MSP
• Rec Factor VIII              Hematology  
• Bosentan monohydrate  Cardiovascular
• Bortezomib                   Oncology                            Source: Thomas Reuters

Posted by Bruce Lehr Jan 30th 2013.

Report on 2012 Biotech M&A

The LifeSci blog reported this morning on some key statistics and trends in Biotech M&A in 2012.  Not surprisingly, some data were good, some bad and some ugly (according to LifeSci).  Here's the summary:

• Median investor multiples in the US have risen from 1.2x in 2005, to 2.5x in 2011 to a nice 3.5x in 2012.  Going my way?
• Unfortunately, this is NOT the case in Europe where the comparable 2012 figure was only 1.3x
• The ugly trend is that the time from founding the company to trade sale is lengthening -- from about 5 years in 2005 to more than 9 years in 2012.  Looks similar to trend line for FDA approvals on new drugs.  Coincidence?

Posted by Bruce Lehr Jan 30th 2013.

List of Last Year's New Drug Approvals

Here's the list of drugs approved last year by FDA courtesy of the Patent Docs blog.  It is always good to have a list someplace easy where you can find it.

Posted by Bruce Lehr Jan 23rd 2013

WIPO Report says China Takes Lead in New Patent Apps

The Patent Doc blog summarized a new report from the World Intellectual Property Organization (WIPO) that shows world patent filings grew by 7.8% in 2011, and China reached the top as judged by number of patent applications filed.  Yes.  China's State Intellectual Property Office (SIPO) became the world's largest by new applications with 526,412, followed by USPTO with 503,582 and JPO (Japan) with 342,610. 

In the past 100 years, only 3 patent offices have ever led in the number of new applications -- those being US, Japan and Germany's Deutsches Patent and Marktnamt (DPMA).  In 2011, 2.14 M applications were filed worldwide and this is the first time the 2 million mark has been breached.

Finally, with respect to country of origin, residents of Japan filed the largest number of applications worldwide (472,417), followed by Chinese residents and then US residents. Digital communications apps grew fastast at 8.1%, and biotech apps grew by 3%, while pharma actually dropped by 1.6%.  So much for pharma R&D productivity! Japan also had the highest number of granted patents with 238,323 and was followed closely by the US with 224,505. Look for the Chinese to catch up here too in the near future.

Posted by Bruce Lehr Jan 17th 2013.

Report Card on Late Stage Drug Development in Big Pharma

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.

 

 

 

 

 

Economists Agree - Drug Development Costs a Sh*tl**d!

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.