Product Pipeline: R&D Productivity

Whether through Acquisitions or In-licensing or Internal development of new products the pipeline is generally a top priority across the sector.

A key challenge is declining R&D Productivity. Despite increasing R&D spending fewer NCEs are being launched. This has been driven by multiple factors including:

• Multiple drugs in the same therapeutic area compete for patients to participate in clinical trials thus enrollment takes longer
• Increased regulatory expectations
• More capital chasing the same therapeutic areas
• New technology is driving longer development cycles – traditionally products were discovered earlier in the R&D process – with genetic engineering the product is largely unknown until later in the development process therefore it is harder to estimate development and production costs
• Increasing late stage terminations

The challenges raised by Declining R&D efficiency mean that players continue to look to Acquisition and In-licensing as a vital element of the product pipeline and hence there is increasing competition for new candidates and the associated intellectual property.

Couple this with the fact that no one company can house all of the capabilities to bring a new drug to market and you have a significant challenge.