Pharmaceutical Research and Development (R&D)

Published Pages Publisher Report code
May 2010 82 GBI Research ASDR-4772
Pharmaceutical Research and Development (R&D)

GBI Research’s pharma report, “Pharmaceutical Research and Development (R&D) - Increasing Efficency Through Information Technology and Externalization” provides key data, information and analysis on major pharmaceutical R&D practices at the global level in order to improve its efficiency and effectiveness. This pharmaceutical and healthcare report provides comprehensive insight into the major challenges in the current pharmaceutical R&D landscape. It analyzes key measures and practices (mergers and acquisitions, R&D restructuring, outsourcing and active lifecycle management) adopted by the pharmaceutical industry to tackle these challenges and improve the R&D efficiency. The report substantiates the analysis with various case studies to study the effect of measure post-implementation. The report also provides an analytical insight into the potential solutions that have tremendous potential to improve the future pharmaceutical and biotech R&D productivity.

The pharmaceutical industry has witnessed a significant decline in R&D productivity over the past few years, which has become a matter of concern among the key stakeholders in the industry, particularly the pharmaceutical companies. While the R&D expenditure of the industry has steadily increased, the output has been declining. The increase in the number of late-stage development failures is costing the pharmaceutical industry dearly. In addition, the stringent regulatory mechanisms on the pricing and reimbursement of approved drugs have added to the pressure. Pharmaceutical companies have tried many ways to improve the R&D efficiency which include the acquisitions of small biotechnology and pharmaceutical companies, R&D restructuring, outsourcing and better lifecycle management of their existing drugs in the market. However, there has been limited success achieved to date.

This report is built using data and information sourced from proprietary databases, primary and secondary research and in house analysis by GBI Research’s team of industry experts.


The report analyses the key measures adopted to improve the R&D efficiency in the pharmaceutical and biotech industry along with the major challenges that have led to a decrease in the R&D productivity over the last decade. The scope of the report includes:

  • Major challenges in the current pharmaceutical R&D landscape.
  • Key solutions adopted by the pharmaceutical industry to improve the R&D productivity which include strategic mergers and acquisitions, R&D restructuring, outsourcing and active lifecycle management.
  • More than 25 examples and case studies explaining each solution and its impact on the R&D productivity in a short and long term.
  • Qualitative analysis of the major potential solutions that can improve the R&D productivity in the future.

Reasons to buy

The report will enhance your decision making. It will allow you to:

  • Identify the key R&D challenges in the industry and its impact on your company's R&D productivity.
  • Understand the three different focus areas of improving R&D efficiency and select the one best suited to the company’s long term business strategy.
  • Develop more efficient and effective solutions by identifying the implementation issues from the case studies and examples covered for each solution.
  • Ensure sustainable R&D growth by identifying long term potential solutions to improve R&D efficiency.
  • Create an integrated and agile R&D organization through the understanding of key technologies and other external partners in improving the R&D efficiency in future.
  • Optimize R&D efforts by identifying the key areas with maximum revenue potential in future.

Table Of Contents:

1 Table of Contents 4
1.1 List of Tables 6
1.2 List of Figures 6
2 Introduction 8
2.1 GBI Research Report Guidance 8
3 Current Challenges in the Pharmaceutical R&D – Declining ROI and Stringent Pricing and Reimbursements are Major Impediments 9
3.1 Declining Return on Investment on R&D 9
3.1.1 Increasing R&D Costs against Declining NME/BLA (New Molecular Entities/Biologic License Application) Approvals in the Last 15 Years (1995–2009) 9
3.1.2 R&D Costs Increase against Revenue Growth for the Top 10 Pharma Companies 10
3.2 Adverse Pricing and Reimbursement Regime for New Drugs 11
3.2.1 Pressure to Curb Healthcare Costs Driving the Increased Adoption of Stringent Pricing Mechanisms 11
3.2.2 Economic Evaluations Gaining Importance as a Key Parameter for Reimbursement Decisions 12
3.3 Generic Competition and Increasing Number of Patent Challenges 14
4 Major Steps Taken by Pharmaceutical Companies to Improve R&D Efficiency – Significant but Ineffective 16
4.1 R&D Components to Concentrate on Increasing Efficiency 16
4.1.1 Decrease Cost – Short Term Solution 17
4.1.2 Improve Returns from the Same Level of Output – Limited Success Potential Solution 17
4.1.3 Increased Output (Number of Drugs) – Long Term Solution 17
4.1.4 Combining Multiple Strategies for Optimum Results 18
4.2 Strategic Consolidations 18
4.2.1 Top Five Major Industry Consolidations in the Last Decade 19
4.3 Restructuring the R&D 24
4.3.1 GlaxoSmithKline – Realigning Focus to Vaccines, Consumer Healthcare and Emerging Markets 25
4.3.2 Pfizer – Redefining the Research Focus and Outsourcing the Rest 26
4.3.3 AstraZeneca – Consolidating R&D Facilities with Narrowed Therapeutic Focus 27
4.3.4 Sanofi-Aventis – Combining Workforce Consolidation with Externalization to Safeguard Future Revenues 28
4.4 Outsourcing R&D to Low Cost Countries – Particularly the Early Stage Research 28
4.4.1 Role of CROs in Providing Cost Efficiencies 29
4.4.2 Drug Discovery Research Outsourcing –Focus on India and China 34
4.5 Better Lifecycle Management of Existing Drugs 40
4.5.1 Indication Expansion 40
4.5.2 Extended/Controlled Release Versions 45
4.5.3 New Formulations 50
4.6 Critical Path Initiative 54
5 Potential Solutions – Information Technology and External Collaborations to Play a Key Role in Reviving R&D Prospects 56
5.1 Solving the Root of the Problem – Improving Discovery Research 57
5.1.1 Failure Rates in Phase I/II/III 57
5.1.2 Improving Drug Discovery Process 61
5.1.3 Improving Clinical Trials Design 62
5.2 Information Technology – Key Success Factor in Optimizing R&D Costs 66
5.2.1 Effective Data Management Is Critical For R&D Productivity 66
5.2.2 Technology Support Inevitable For Personalized Medicine: The Future Class of Medicines 69
5.2.3 Paperless Clinical Trials – A Billion Dollar Saving Potential 70
5.3 Network R&D – Involving External Partners to Complement Internal R&D Capabilities 72
5.4 R&D Hive-off 74
5.4.1 AstraZeneca’s Alberio 74
5.4.2 Sanofi-Aventis’ Novexel 75
5.5 Establishing Focus on Niche Markets 75
6 Conclusion 76
7 Appendix 77
7.1 Market Definitions 77
7.2 Abbreviations 77
7.3 Research Methodology 79
7.3.1 Coverage 80
7.3.2 Secondary Research 80
7.3.3 Primary Research 80
7.3.4 Expert Panel Validation 81
7.4 Contact Us 81
7.5 Disclaimer 81
7.6 Sources 81

List of Tables

Table 1: Pharmaceutical and Biotech R&D Expenditure ($bn) v/s Number of NME/BLA Approvals, the US, 1995–2009 9
Table 2: Comparison of CAGR of R&D Expenditure v Turnover for the Top Ten Pharmaceutical Companies in 2009, 2004–2009 11
Table 3: Examples of Pharmacoeconomic Evaluations in Ireland, 2010 14
Table 4: Adalat Worldwide Sales, €m, 1998–2009 42
Table 5: Fosamax Worldwide Sales, $m, 2002–2009 44
Table 6: Aciphex/Pariet Worldwide Sales, ¥bn, 2000–2009 45
Table 7: Risperdal/Risperdal Consta Worldwide Sales, $m, 2001–2009 46
Table 8: Zithromax/Zmax Worldwide Sales, $m, 1994–2009 48
Table 9: Coreg/Coreg CR Worldwide Sales, £m, 2001–2009 49
Table 10: Aricept Worldwide Sales, ¥bn, FY 1999–FY 2009 51
Table 11: Concerta Worldwide Sales, $m, 2004–2009 52
Table 12: Takepron Worldwide Sales, ¥bn, FY2002–FY2009 54

List of Figures

Figure 1: Pharmaceutical and Biotech R&D Expenditure ($bn) v/s Number of NME/BLA Approvals, the US, 1995–2009 9
Figure 2: Comparison of CAGR of R&D Expenditure v Turnover for the Top Ten Pharmaceutical Companies in 2009, 2004–2009 10
Figure 3: Major Pricing and Reimbursement Strategies Employed Across the Globe, 2010 12
Figure 4: ISPOR 33 Guidelines for Pharmacoeconomics Assessment, 2010 13
Figure 5: Results Breakdown of Patent Challenges, the US, 2001–2008 15
Figure 6: Key Strategies to Increase R&D Efficiency, 2010 16
Figure 7: Pfizer–Wyeth Deal, Deal Rationale from Wyeth’s Perspective, January 2009 19
Figure 8: Roche–Genentech Deal, Deal Rationale from Roche’s Perspective, July 2008 20
Figure 9: Merck–Schering-Plough Deal, Deal Rationale from Merck’s Perspective, March 2009 21
Figure 10: AstraZeneca–MedImmune Deal, Deal Rationale from AstraZeneca’s Perspective, April 2007 22
Figure 11: Eli Lilly–ImClone Systems Deal, Deal Rationale from Lilly’s Perspective, October 2008 23
Figure 12: Key Measures for Effective R&D Restructuring, 2010 24
Figure 13: GSK R&D Restructuring, CEO Statement, February 2009 25
Figure 14: Pfizer R&D Restructuring, President – BioTherapeutics R&D Statement, November 2009 26
Figure 15: AstraZeneca R&D Restructuring, CEO & EVP Statement, 2010 27
Figure 16: Sanofi-Aventis R&D Restructuring, CEO Statement, June 2009 28
Figure 17: Contract Research Outsourcing – Major Reasons for Outsourcing, April 2010 29
Figure 18: Quintiles-Eli Lilly Alliance, Client-Vendor Testimonials, October 2009 31
Figure 19: Quintiles-Solvay Alliance, Client Testimonial, October 2006 31
Figure 20: Covance-Eli Lilly Alliance, Vendor Testimonial, February 2010 32
Figure 21: PPD-Merck Alliance, Vendor Testimonial, January 2009 33
Figure 22: ICON-Eli Lilly Alliance, Client Testimonial, November 2008 33
Figure 23: Reasons to Outsource Drug Discovery to Low Cost Countries, 2010 34
Figure 24: Arthur Higgins, President of EFPIA on Establishing Europe as a Leading Developer of Medicines, 2010 36
Figure 25: WuXi AppTec-Merck Alliance, Vendor Testimonial, December 2006 37
Figure 26: AstraZeneca Alliances with Jubilant Biosys and WuXi AppTec, Client Testimonials, 2010 38
Figure 27: Client Testimonial – BMS-Syngene Partnership, 2010 39
Figure 28: LCM Activity in the Pipeline for Major 20 Pharmaceutical Companies, 2010 40
Figure 29: Adalat Worldwide Sales, €m, 1998–2009 42
Figure 30: Fosamax Worldwide Sales, $m, 2002–2009 43
Figure 31: Aciphex/Pariet Worldwide Sales, ¥bn, 2000–2009 45
Figure 32: Risperdal/Risperdal Consta Worldwide Sales, $m, 2001–2009 46
Figure 33: Zithromax/Zmax Worldwide Sales, $m, 1994–2009 48
Figure 34: Coreg/Coreg CR Worldwide Sales, £m, 2001–2009 49
Figure 35: Aricept Worldwide Sales, ¥bn, FY 1999–FY 2009 51
Figure 36: Concerta Worldwide Sales, $m, 2004–2009 52
Figure 37: Takepron Worldwide Sales, ¥bn, FY2002–FY2009 53
Figure 38: The FDA’s Critical Path Opportunities List, 2010 55
Figure 39: Pharmaceutical Research and Development, Key Steps for Success, 2010 56
Figure 40: Breakdown of Discontinued Pipeline Projects by Phase for Seven Big Pharmaceutical Companies, April 2010 57
Figure 41: Breakdown of Discontinued Pipeline Projects by Therapeutic Area for Seven Big Pharmaceutical Companies, April 2010 57
Figure 42: FDA Warning to Merck on Vioxx, 2010 59
Figure 43: 2006 Conference on Adaptive Trial Design, FDA Deputy Commissioner for Medical and Scientific Affairs Statement, October 2006 63
Figure 44: Wyeth Learn and Confirm Model, 2010 64
Figure 45: Clinical Data Management System Flow, May 2010 67
Figure 46: Reasons – Clinical Data Management Outsourcing, May 2010 68
Figure 47: TCS – Eli Lilly  Outsourcing Deal, Client Rationale, November 2006 68
Figure 48: Cognizant – AstraZeneca Outsourcing Deal, Client-Vendor Rationale, March 2008 69
Figure 49: Potential of Genomic Sequencing in Personalized Medicine, ICGC Scientists Statement, April 2010 70
Figure 50: Typical Clinical Trial Management System, 2010 71
Figure 51: Collaborative Pharmaceutical Research and Development, Key Partners, 2010 73
Figure 52: Improving Pharma R&D Efficiency, R&D Hive-off Strategy and Benefits, 2010 74
Figure 53: GBI Research Methodology, 2010 79

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