The pharmaceutical industry may have churned out some potential blockbuster treatments recently, but the return on R&D efforts by a dozen of the largest drug makers continues to decline — from 10.1 percent in 2010 to a projected 3.2 percent this year, according to a new report.
During that period, the average peak sales for each drug reached $465 million, which was up 18 percent from 2016 and the highest in three years, but still 8 percent below the levels seen in 2010, according to the analysis by the Deloitte Centre for Health Solutions.
Meanwhile, the costs to discover, develop, and launch a drug jumped to nearly $2 billion, from more than $1.5 billion in 2016 and $1.2 billion in 2010. Why? There were fewer assets in late-stage pipelines — 159 this year compared with 189 a year earlier — thanks to more drugs being terminated during development and fewer pipeline candidates to replace them. The figure, by the way, is slightly less than another widely cited number.
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Another reason that sales will continue to decline for the high priced drugs is that, starting in 2018 rebates for some drugs will go up significantly, fact of life and companies have no choice if they wish to remain on formulary.
Modern drug development has turned into the equivalent of walking the proverbial tightrope without a net. We always had at least a few cash cows that we could fall back upon while the riskier projects proceeded. Many of those cows have been genericized, and for more and more companies one slip off the rope and they will wind up like Karl Wallenda.
Ed, to the C Suite guys the sales per employee is a key metric. With declining headcount commensurate with declining sales it would be interesting to see if this ratio has changed.
Hi Pharmvet1,
Yes, good point. I noted that in a post about Teva yesterday, in fact. I will ask about this, though.
Cheer,
Ed at Pharmalot