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Profits from innovations in the pharmaceutical industry are decreasing

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Image courtesy of amenic181 at FreeDigitalPhotos.net

07.06.2016

The pharmaceutical sector is perceived as being among the most innovative ones that allocate the most resources to its development activities. However, as noted in the report released by Deloitte entitled "Measuring the return from pharmaceutical innovation 2015. Transforming R&D return in uncertain times", this activity is becoming less and less profitable. It turns out that the return rate from investments made into pharmaceutical innovations is decreasing ? in 2015 it amounted to 4.2%, while in 2010 it equalled 10.1%.

The report analyses the situation of 12 leaders of the life science market who allocate the most resources to the research and development of their products (Amgen, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson&Johnson, Merck, Novartis, Pfizer, Roche, Sanofi i Takeda), as well as it takes 4 medium-sized companies into account, as taken from the list of 25 entities investing the most into their R&D activity.

As it appears, medium-sized companies generate better returns from the R&D activity. Their average return rate from investments made between 2013 and 2015 amounted to 17%, while in the case of the largest companies, the mere return rate of 5% was recorded.

The average annual cost of placing a product on the market incurred between 2010 and 2015 increased by 33%, up to the amount of 1,57 billion USD (the average annual sales value decreased by a half), while in the group of medium-sized companies, the returns increased by 130% with regard to 2013.

According to the analysts of Deloitte, the advantage of smaller companies over so-called Big Pharma is associated e.g. with the easiness of adaptation of smaller entities to market needs, the focus on specific specialisations and the increased use of external sources of innovation (acquisitions and licences).

Full report can be found here.

Source: Deloitte
Image credits: amenic181
Image source: FreeDigitalPhotos.net
 
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