Analysis of pharma R&D productivity – a new perspective needed

• DOI: 10.1016/j.drudis.2023.103726
• Publication Date: 2023-07-26T18:42:49Z
• Authors: Alexander Schuhma...; Markus Hinder; Alexander von Ste...; Dominik Hartl; Oliver Gassmann
• Keywords: Drug industry; Mergers and Acquisitions; Drug approval

R&D productivity continues to be the industry's grand challenge. We analyzed the R&D input, output, and outcome of 16 leading research-based pharmaceutical companies over 20 years (2001-2020). Our analysis shows that pharma companies increased their R&D spending at a compound annual growth rate of 6% (2001-2020) to an average R&D expenditure per company of $6.7 billion (2020). The companies in our investigation launched 251 new drugs representing 46% of all CDER-related FDA approvals in the past 20 years. The average R&D efficiency of big pharma was $6.16 billion total R&D expenditures per new drug. Almost half of the leading companies needed to compensate for their negative R&D productivity through mergers and acquisitions.