In fact, projected returns at 12 of the world's top drugmakers have
fallen to an eight-year low of only 3.2 percent, consultancy
Deloitte said on Thursday.
The disconnect reflects the rising cost of developing new drugs,
meager peak sales expectations for individual products and the fact
that younger biotechnology companies are accounting for a growing
proportion of new products.
So far this year, the U.S. Food and Drug Administration, gatekeeper
to the world's biggest drugs market, has approved 41 novel drugs
compared with 22 for the whole of 2016. (http://tmsnrt.rs/2hGom21)
The strong biotech sector is good news for investors like Daniel
Koller, head of investment management at Swiss-based BB Biotech,
which has money tied up in fast-growing U.S. and European companies.
![](http://archives.lincolndailynews.com/2017/Dec/14/images/ads/current/lincolntheatre_sda_031016.png)
"It's been a great year for approvals in 2017 and we assume another
very positive year for biotech in 2018," he told Reuters. "It is a
confirmation of the health of the industry."
But for the giants of the pharma world tracked by Deloitte, things
are not so rosy. This decade has seen shrinking profitability in
their research labs, with the average internal rate of return (IRR)
down sharply from 10.1 percent in 2010 to 3.2 percent this year.
A separate group of four large biotech companies are projected to
enjoy an IRR nearly four times higher at 11.9 percent. The
calculations are based on long-term sales forecasts.
"The biotech companies are seeing more success," said Mark Steedman,
one of the report's authors.
Steedman said biotechs typically had a leaner cost structure,
although there were signs of big pharma beginning to streamline R&D
operations and deploy new technologies in drug discovery, such as
artificial intelligence.
"There are reasons for optimism," he said. "It's going to take a
little bit of time but we the think the impact could be monumental
in terms of increasing productivity."
$2 BILLION PER DRUG
Today, the average cost of bringing a new drug to market at a large
company is nearly $2 billion, up from $1.2 billion in 2010, while
forecast annual peak sales per drug have fallen from $816 million in
2010 to $465 million.
[to top of second column] |
![](http://archives.lincolndailynews.com/2017/Jan/26/images/ads/current/Symphony_lda_2017.png)
The figures highlight a dilemma as R&D resources are shifted from
mass-market treatments to more specialist therapy areas.
This year's haul of new drugs does include some likely blockbusters
designed for relatively wide use, such as Roche's multiple sclerosis
drug Ocrevus and Novo Nordisk's Ozempic for diabetes. But many new
drugs are for rare diseases, including very specific sub-types of
cancer.
A few are truly ground-breaking, such as the first gene-modified
cell therapy against a type of leukemia from Novartis, and next year
is expected to see the first U.S. approval of a gene therapy for a
rare inherited eye condition.
Such pioneering drugs come at a huge price, with Novartis' cell
therapy Kymriah costing $475,000, while gene therapy could fetch
around $1 million per patient.
"The insights from human genetics and the insights from an
understanding of the immune system are finally being translated in
medicines, and very new technologies are now starting to pay off,"
Roche CEO Severin Schwan said in a recent interview.
![](http://archives.lincolndailynews.com/2017/Dec/14/images/ads/current/llm_lda_CHRISTMAS_2017.png)
The 12 big drugmakers analyzed in the Deloitte study were Pfizer,
Roche, Novartis, Sanofi, GlaxoSmithKline, Johnson & Johnson,
AstraZeneca, Merck & Co, Eli Lilly, Bristol-Myers Squibb, Takeda and
Amgen.
The four large biotech companies were Biogen, Celgene, Gilead
Sciences and AbbVie.
(Reporting by Ben Hirschler; Editing by Susan Fenton)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |