Changing R&D models in research-based pharmaceutical companies

Alexander Schuhmacher · Oliver Gassmann · Markus Hinder

286 citations0/0 files storedJournal of Translational Medicine

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Pharmaceutical Economics and Policy Innovation and Knowledge Management Pharmaceutical industry and healthcare

Abstract

New drugs serving unmet medical needs are one of the key value drivers of research-based pharmaceutical companies. The efficiency of research and development (R&D), defined as the successful approval and launch of new medicines (output) in the rate of the monetary investments required for R&D (input), has declined since decades. We aimed to identify, analyze and describe the factors that impact the R&D efficiency. Based on publicly available information, we reviewed the R&D models of major research-based pharmaceutical companies and analyzed the key challenges and success factors of a sustainable R&D output. We calculated that the R&D efficiencies of major research-based pharmaceutical companies were in the range of USD 3.2-32.3 billion (2006-2014). As these numbers challenge the model of an innovation-driven pharmaceutical industry, we analyzed the concepts that companies are following to increase their R&D efficiencies: (A) Activities to reduce portfolio and project risk, (B) activities to reduce R&D costs, and (C) activities to increase the innovation potential. While category A comprises measures such as portfolio management and licensing, measures grouped in category B are outsourcing and risk-sharing in late-stage development. Companies made diverse steps to increase their innovation potential and open innovation, exemplified by open source, innovation centers, or crowdsourcing, plays a key role in doing so. In conclusion, research-based pharmaceutical companies need to be aware of the key factors, which impact the rate of innovation, R&D cost and probability of success. Depending on their company strategy and their R&D set-up they can opt for one of the following open innovators: knowledge creator, knowledge integrator or knowledge leverager.

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References

2003The price of innovation: new estimates of drug development costs 2004Can the pharmaceutical industry reduce attrition rates?2010How to improve R&D productivity: the pharmaceutical industry's grand challenge 2014Clinical development success rates for investigational drugs 2012Diagnosing the decline in pharmaceutical R&D efficiency 2011Believe it or not: how much can we rely on published data on potential drug targets?2014Lessons learned from the fate of AstraZeneca's drug pipeline: a five-dimensional framework 2009Lessons from 60 years of pharmaceutical innovation

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