FILE PHOTO: Used blister packets that contained medicines, tablets and pills are seen, in this picture illustration taken June 30, 2018. REUTERS/Russell Boyce
LONDON (Reuters) – The cost of developing a new drug has nearly doubled since 2010 and the world’s 12 biggest drugmakers are making the lowest return on their R&D investments in nine years, according to Deloitte.
An annual survey of the economics of pharma research and development (R&D) by the consultancy found that despite a steady flow of new medicines reaching global markets, the 12 drugmakers’ average return on their R&D fell to 1.9 percent this year, from 3.7 percent a year ago.
The average cost of bringing a new medicine to market is now $ 2.18 billion, up from $ 1.19 billion back in 2010.
Yet forecast peak sales for new medicines have halved over the same period to $ 408 million on average – a decline that reflects a growing focus on relatively small targeted patient groups, leading to multiple niche treatments.
“Despite the launch of many successful products, growing development costs and regulatory constraints are making it more difficult than ever for companies to redeem their R&D investment,” said Deloitte consulting partner Colin Terry.
Overall, R&D returns are down by 8.2 percentage points since 2010, when they stood at 10.1 percent.
A group of younger and more specialized biotech companies analyzed by Deloitte fared a lot better, with average returns of 9.3 percent, although this was still down from 12.5 percent in 2017.
The 12 big drugmakers tracked by Deloitte are Pfizer, Roche, Novartis, Sanofi, GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Merck & Co, Eli Lilly, Bristol-Myers Squibb, Takeda and Amgen.
The four biotech companies are Biogen, Celgene, Gilead Sciences and AbbVie.
Reporting by Ben Hirschler; Editing by Susan Fenton