Words by GOLD newsdesk
Projected pharmaceutical R&D return on investment has hit its lowest level for 13 years, declining to 1.2% in 2022 compared to a record level of 6.8% in 2021, according to a new report by Deloitte.
The firm’s annual study entitled ‘Measuring the return from pharmaceutical innovation’ found that since COVID-19 products have entered commercialisation and therefore moved out of the scope of this year’s window of analysis, there was a sharper dip in projected returns than anticipated.
“While a drop-off in projected returns for biopharma R&D was inevitable after such an exceptional year in 2021, the degree is sharper than many would have expected,” commented Karen Taylor, Director and Head of Research, Deloitte Centre for Health Solutions. Even if COVID-19 products were excluded from calculations, the average ROI for 2021 was still double the 2022 projections, she said.
This was due to several factors, including the industry reducing overall spend on drug development and increased average trial cycle times. Longer cycle averages meant that drug development costs rose by around 13% in 2022. In addition, a rise in drugs failing to make it to market also contributed.
On this note, Taylor added: “Our analysis revealed that the number of terminated assets has doubled.” Not only were more drugs abandoned last year than in 2021, many were predicted to be ‘blockbuster’ drugs, which could have delivered high revenues for the industry.
The report is the thirteenth study into pharma R&D project ROI from Deloitte. It aims to explore the performance of the pharma industry and its ability to generate returns from its investment in innovative new products on a yearly basis.