As
drug approvals dive in 2016, returns on R&D deteriorate
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[December 14, 2016]
By Ben Hirschler
LONDON (Reuters) - The global
pharmaceuticals industry is set to win the lowest annual number of new
drug approvals this year since 2010 and a new report on Tuesday suggests
drugmakers' returns on research investment are deteriorating.
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Only 19 new drugs have been approved in the key U.S. market so far
in 2016 and, with less than three weeks to go, it is clear the
full-year tally will be well down on 2015 and 2014's bumper haul of
45 and 41 new products respectively.
At the same time the profitability of drug research is being
squeezed by steadily rising costs and increasing political pressure
over the high prices of many modern medicines.
As a result projected returns on investment in research and
development (R&D) for the top 12 pharmaceutical companies have
fallen to just 3.7 percent this year from a high of 10.1 percent in
2010, according to consultancy Deloitte.
"The majority of companies are struggling to achieve historical peak
sales," said Colin Terry, a director in Deloitte's life sciences
practice.
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"As costs per product remain high, sales projections decline, and
given it now takes the industry over 14 years to launch a drug, real
questions should be raised about productivity and returns on
innovation."
Deloitte's annual report calculates the return on investment that
leading drug companies can expect based on long-term sales
forecasts.
Many industry executives still remain upbeat about finding new
medicines, given advances in understanding the genetic basis of a
wide range of diseases. However, they acknowledge the peak approval
rates seen in 2014 and 2015 were exceptional.
An increasing number of new treatments are being targeted at niche
patient populations and are designed for rare diseases or very
specific sub-types of cancer.
With a few more drugs still expected to win a green light from the
U.S. Food and Drug Administration (FDA) this month, including
Roche's closely watched multiple sclerosis drug Ocrevus, Deutsche
Bank analysts believe the final total of new approvals for 2016 will
be around 22.
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That is well below the 2005-2015 average of 28 but next year there
could be a rebound, given the industry's promising development
pipeline. Some products that were delayed in 2016, such as Sanofi
and Regeneron's sarilumab for rheumatoid arthritis, could also get a
green light.
As a result, Deutsche sees potential for a 2017 new drug tally of 37
- and the industry could receive a boost if FDA reform speeds up the
approval process.
The European Medicines Agency (EMA) has also waved through fewer new
products this year, recommending a total of 73 new medicines in the
first 11 months of 2016 against a 2015 total of 93. Unlike the FDA,
the EMA includes generic drugs in its list.
(Editing by Greg Mahlich)
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