Bumper Crop Of New Drugs Fails To Lift Big Pharma R&D Returns

www.oann.com | 8/14/2012 | Staff
Pumpkinajn (Posted by) Level 3
LONDON (Reuters) – It is shaping up to be a bumper year for drug approvals, with U.S. officials clearing twice as many novel medicines as in 2016, yet returns on research investment at leading pharmaceutical companies are down.

In fact, projected returns at 12 of the world’s top drugmakers have fallen to an eight-year low of only 3.2 percent, consultancy Deloitte said on Thursday.

Disconnect - Cost - Drugs - Meager - Sales

The disconnect reflects the rising cost of developing new drugs, meager peak sales expectations for individual products and the fact that younger biotechnology companies are accounting for a growing proportion of new products.

The strong biotech sector is good news for investors like Daniel Koller, head of investment management at Swiss-based BB Biotech, which has money tied up in fast-growing U.S. and European companies.

Year - Approvals - Year - Biotech - Reuters

“It’s been a great year for approvals in 2017 and we assume another very positive year for biotech in 2018,” he told Reuters. “It is a confirmation of the health of the industry.”

But for the giants of the pharma world tracked by Deloitte, things are not so rosy. This decade has seen shrinking profitability in their research labs, with the average internal rate of return (IRR) down sharply from 10.1 percent in 2010 to 3.2 percent this year.

Group - Biotech - Companies - IRR - Times

A separate group of four large biotech companies are projected to enjoy an IRR nearly four times higher at 11.9 percent. The calculations are based on long-term sales forecasts.

“The biotech companies are seeing more success,” said Mark Steedman, one of the report’s authors.

Steedman - Biotechs - Leaner - Cost - Structure

Steedman said biotechs typically had a leaner cost structure, although there were signs of big pharma beginning to streamline R&D operations and deploy new technologies in drug discovery, such...
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