Pharma R&D investment report shows positive signs: Deloitte

By Jenni Spinner contact

- Last updated on GMT

(simoncarter/iStock via Getty Images Plus)
(simoncarter/iStock via Getty Images Plus)

Related tags: Deloitte, R&D, Investment, Research, Drug development, preclinical, COVID-19

According to the company’s 12th Annual Pharmaceutical Innovation Report, pharmaceutical R&D return on investment has climbed to its highest peak since 2014.

According to findings from Deloitte's Center for Health Solutions 2021 report, investments indicate a high level of confidence in the life-sciences business and point toward a reversal of a previous decline in projected R&D productivity. In fact, the reported 4.3 percentage point increase in projected returns on investment (ROI) in 2021 over 2020 levels constitutes the largest annual increase since the study began.

Neil Lesser principal with Deloitte Consulting and US life sciences R&D leader, said that while the increase in investment performance is good news, keeping it high will require continued investment in innovative approaches.

These include expanding investments in digital technologies and data science approaches, as well as increasing the use of transformative development models​,” Lesser said. “The industry's response to the COVID-19 pandemic proved that biopharma innovation can be accelerated through creative approaches to drug development — only time will tell if this progress becomes a permanent legacy​."

Other positive points in the report include a rise in peak sales, reduced development costs, and reduced length of cycle types; according to analysts, these point toward pharma companies beginning to grasp the benefits of optimized processes as well as innovation in R&D processes. It also points out that the COVID-19 vaccine development process may end up acting as a “blueprint” for other industry professionals to plan, design, and execute studies more efficiently.

Sonal Shah, senior manager with Deloitte Services and Center for Health Solutions Life Sciences Research leader, noted, "The pandemic certainly has accelerated innovation in R&D models, and it has illuminated the benefits of leading practices including industry collaboration, data-sharing, and digitization. We also should recognize that development cycle times continue to challenge the industry and that new ways of working together allowed the industry to deliver life-saving treatments and make a significant difference in the world​." 

The Deloitte analysis also indicated that the pharmaceutical companies continue to turn to outsourcing partners to help fuel more than half of their late-stage R&D pipeline; the figure increased to 71% in 2021 from 51% in 2018. The cohort also revealed a noted increase in co-developed assets (from 32% in 2020 to 46% in 2021).

Other key takeaways:

  • Projected ROIs in pharma R&D in 2021 are up to 7 % from 2.7 %, the largest annual increase since the study began in 2010.
  • Forecast peak sales per asset have increased to $521m USD, up from $422m USD in 2020.
  • The average cost of developing a new drug in 2021 fell to $2b USD compared to $2.4b USD in 2020.
  • Average cycle times decreased year-on-year for the first time since 2016, declining to 6.9 years compared to 7.14 years in 2020.
  • COVID-19 phase III trials were, on average, 3.7 times faster than non-COVID-19 infectious disease trials.

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