What You Should Know:
– Deloitte Centre for Health Solutions releases its thirteenth annual report, ‘Seize the Digital Momentum: Measuring the return from pharmaceutical innovation 2022’ that explores the performance of the biopharmaceutical industry (bio Pharma) and its ability to generate returns from investment in innovative new medicines.
– Since 2021, much of the world has successfully adjusted to life where COVID-19 is more endemic as vaccines and treatments reduced the risk and severity of illness, however geopolitical turmoil and a global cost-of-living crisis have continued to drive serious instability in the health landscape.
Pharmaceutical Innovation – Trends and Insights At a Glance
This is the 13th in a series of reports on Measuring the return from pharmaceutical innovation, providing insights into the state of bio Pharma R&D since 2010. The inaugural report analyzed the average IRR that a cohort of 12 large-cap biopharma companies might expect to achieve from their late-stage pipelines. However, between 2010 and 2015, the IRR fell from 10.1 percent to 4.2 percent, suggesting that smaller more dynamic and flexible R&D units were better. Equipped to confront the challenges of biopharma R&D. Between 2013 and 2019, the expected returns of the original cohort continue to fall year-on-year while the much higher returns experienced initially by the extension cohort fell more dramatically, resulting in a convergence in the IRR of the two cohorts to an all-time low in 2019. In 2010, however, against the backdrop of the start of the COVID-19 pandemic, there was a small uptick in the average IRR.
Measuring the return from pharmaceutical innovation:
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– In 2021 Deloitte observed a notable rise in average IRR to 6.8 percent, driven by high forecast values for COVID-19 assets (including vaccines and treatments) and one high-value late-stage neurological asset. This resulted in two companies with IRRs that were significant outliers. However, as some of these approved COVID-19 assets moved into the commercial portfolio, the IRR has declined again to 1.2 percent. Indeed, the forecast value of approved assets leaving the pipeline has tripled from 2021 to 2022. Moreover, despite the reduction in IRR, the interquartile range of individual company IRRs has narrowed compared to previous years and therefore this decline can, in part, be attributed to the absence of a high-value company outlier.
– In 2022, the top 20 companies spent a total of $139 billion on R&D, a two percent decrease in underlying R&D expenditure compared to 2021 ($141 billion). The average cost to develop an asset was $2,284 million, an increase of $298 million from 2021, mainly due to an increase in average cycle time length as the impact of COVID-19 on cycle time acceleration has not continued. Moreover, the average cost to develop an asset from discovery to launch is in line with the pre-pandemic 2018-2020 data.
– In 2022, only one of the companies we analyzed is predicted to achieve average forecast peak sales greater than $1 billion across all their assets, and only five companies improved their projected peak sales per asset compared to 2021. In 2022, the average forecast peak sales per pipeline asset for the combined cohort decreased from $500 million in 2021 to $389 million in 2022. However, the 2022 value is almost identical to the forecast peak sales of 2020. This decline in the average forecast peak sale per asset is driven mainly by the number of high-valued assets that have left the pipeline this year.
Source: Hitconsultant