Pharma’s R&D spending and ROI are high and rising.
Deloitte 4-29-2024. [Deloitte, multinational professional services network; “Global pharma companies’ return on R&D investment increases after record low,” https://www.deloitte.com/uk/en/about/press-room/global-pharma-companies-return-on-rd-investment-increases-after-record-low.html //cpsw-sp //cpsw-ay]
The world’s top 20 pharmaceutical companies collectively spent $145 billion on their research and development (R&D) investments in 2022-23*, up from $139 billion in 2021-22*, according to new research from Deloitte.
The Measuring the return from pharmaceutical innovation: Unleash AI’s potential report from Deloitte, the 14th in the series, analyses the current state of R&D return on investments (ROI) for a cohort of 20 leading biopharma companies. According to the study, the rise in R&D spend [sic] is attributed to several factors, including more complex trial requirements, regulatory changes and the impact of inflation.
When it comes to the average ROI for the cohort, the analysis shows an increase to 4.1 per cent in 2023, up from the 2022 record low of 1.2 per cent. This marks a recovery from the declining ROI trend of the past decade, the only exception to this being the 2021 productivity spike (6.8 per cent) driven by rapid approvals and emergency authorisations of COVID-19 related drugs.
The report also sheds light on how the current R&D operating model within pharma continues to experience significant pressures. This is due to ongoing regulatory changes, the impending and unprecedented scale of the loss in exclusivity of high value drugs, and high inflation of supplier costs. Other challenges include the rapid pace of scientific advances, rising clinical trial complexity, and the costs of diagnostics. Yet the report illustrates that these pressures are also creating new opportunities to improve R&D productivity.