$2 billion to replace a new drug!

The expected ROI for biopharmaceuticals in 2021 increased to 7% from 2.

Since 2010, Deloitte, one of the world's four largest accounting firms, has been tracking the largest companies in the global biopharmaceutical industry, trying to analyze their performance to understand the biopharmaceutical industry from the research and development of innovative products, especially from the The ability of late-stage R&D pipelines to achieve ROI

Deloitte recently released its 12th annual report

The report found three major trends:

First, the expected return on innovation continues to trend upward

Second, the cost of bringing innovation pipelines to market has declined over the past three years

Third, more and more R&D innovations come from outside

Fourth, the time period for R&D has improved slightly, but is still higher than it was before the COVID-19 pandemic

Fifth, the COVID-19 pandemic is creating momentum for change

01

'Encouraging' reversal

The Deloitte report appears to reveal that biopharmaceutical R&D productivity may be showing "encouraging" signs of a reversal from a nearly decade-long decline

In 2020, Deloitte observed a slight recovery in biopharmaceutical innovation R&D returns from 2020 (from 1.

In 2021, the "seed" continued to receive "nurturing growth", and the rate of return rose sharply to 7%, which is also the largest annual increase since Deloitte began its research in 2010

This is aided by a general growth trend, with 13 of the 15 companies achieving positive returns, compared with only three in 2020
.
On the other hand, the signs of weak strong bands are equally obvious
.
The two best performers have an IRR of over 18% in 2021, and the gap between the best and worst performers (25.
9 percentage points) is much higher than in 2020 (18.
6 percentage points) and is even the largest since 2015 gap
.

In terms of R&D costs, the 15 biopharmaceutical companies covered in the report spent $126.
9 billion on R&D in 2021, a 28% increase in R&D spending compared to 2020
.
In contrast, these companies have a total of 63 new pipelines included in the statistics, compared with 45 in 2020, and these new pipelines contributed 1.
6% to IRR growth and expected lifetime sales of up to $278 billion
.

The other 15 companies have a total of 242 late-stage pipelines, and the average number of pipelines per company has reached 16.
1, which is also the highest value since 2013
.
It is also due to the increase in the number of late-stage pipelines that the average cost of R&D for biopharmaceutical companies in 2021 will be slightly reduced to US$2 billion
.
Although the average has fallen, it will cost at least $842 million to develop a new drug in 2021, and it could be as high as $5.
034 billion
.

On the other hand is a small increase in expected peak sales of the drug
.
Average expected peak sales per pipeline in 2021 increase from $422 million in 2020 to $521 million in 2021
.
However, this is largely due to the impact of the new crown vaccine-related pipeline, if it is excluded, the average expected peak sales will drop to 355 million US dollars
.

Access to innovation through increasing external sources is also an important driver of the reversal
.
Deloitte observed that starting in 2018, an increasing proportion of the late-stage pipelines of biopharmaceutical companies it tracks came from outside sources
.
Deloitte analysis said this trend is likely to be one of the results of venture capital and early-stage financing, and the growing trend shows that biopharmaceutical companies need to cooperate with other (usually smaller) players to expand their innovation pipelines
.

As the R&D pipeline gets closer to commercialization and attracts more external innovation cooperation, the proportion of late-stage pipelines jointly developed in 2021 will increase from 32% in 2020 to 46% in 2021
.
Another Deloitte statistics on five of these companies more intuitively shows the growth trend of external innovation
.
The percentage of pipelines these five companies source externally will increase from 33% in 2017 to 71% in 2021

02

The inspiration brought by the new crown drug to accelerate the research and development

Another key driver is the time period for research and development
.

According to Deloitte's observation, the time cycle of drug R&D has shown a rising trend since 2016, reaching the highest level (7.
14 years) in 2020
.
In 2021 the situation improved slightly, at 6.
9 years
.
Although this number is still at the high point before the new crown pandemic in 2019, the average cycle time has been shortened thanks to the rapid development of new crown treatments and vaccines
.

In fact, lessons from the COVID-19 pandemic are changing the approach to biopharmaceutical development
.
Due to the urgent need to respond to the epidemic, the "requirement for R&D speed" has risen to an unprecedented height, which has strengthened the need to optimize the R&D process and fundamentally change the way of drug development, and has also enabled the biopharmaceutical industry to reflect and learn from it.

.
"

Taking Merck's world's first novel coronavirus oral antiviral drug molnupiravir as an example, Merck started to advance the preparations for its clinical trials while launching a number of research work, and submitted clinical trial applications to the United States and the United Kingdom simultaneously within 16 days, usually Setup work that took 2-3 months to complete was completed within two weeks of the project launch
.
Its clinical recruitment team begins pre-screening subjects even before clinical trial applications are approved
.
The simultaneous advancement of these efforts enabled the first patient to be dosed on day 23, much faster than the industry average of more than 4 months
.

The same is true for the development of a new crown vaccine
.

Deloitte summarizes these experiences in the following six points in the report:

Facilitate the development of high-risk projects by identifying projects with a high probability of success, enabling them to bypass certain stage hurdles and enable a seamless transition from one development stage to the next; expand cooperation with regulators Dialogue to expedite the development of much-needed therapies through data sharing infrastructure and coordination of requirements across regions; focus on simplifying trial protocol design and reduce the number of relevant endpoints to reduce burden on field staff, avoid protocol bias and save development time; seek to have Master protocols and adaptive trial designs for transformative development approaches to enable rapid evaluation of treatments; accelerate the use of digital technologies for hybrid studies, optimize site selection, recruit diverse study populations, obtain data from remote patients and manage patients; strive for clinical Greater diversity of trials to ensure disease prevalence in the study population is matched across racial and ethnic groups
.

The content of this article is derived from Deloitte's "Nurturing growth: Measuring the return from pharmaceutical innovation 2021"

(Original abridged)