The Financial Ecosystem of Pharmaceutical R&D
- Special Report
The Ministry of Health, Welfare and Sports of the Netherlands commissioned a descriptive study into the financial ecosystem of pharmaceutical R&D, which was granted to a consortium of SiRM, L.E.K. Consulting and RAND Europe
This study’s overarching conclusion is that a drug’s expected financial return ultimately determines whether it is developed up to launch. Assessment of expected financial return incorporates multiple interconnected factors, including but not limited to commercial potential, investment cost, availability of capital, the potential for scientific and medical advancement, strategic fit and risk. The relative importance of these factors varies by investor and evolves as drugs move through the drug-development continuum. Global governments and (private) insurance companies’ expected willingness to pay for new drugs influences the investment in development of novel drugs and the relative distribution across therapeutic areas. Other important factors influencing the supply of novel drugs are the pace and nature of scientific advances, the ability of R&D systems to leverage data and digital technology advances to inform innovative clinical trial designs, and regulatory developments.
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