The cost of biopharmaceutical R&D: is biotech different?
TL;DR: The results should be viewed with some caution for now given a limited number of biopharmaceutical molecules with data on cash outlays, different therapeutic class distributions for biophARMaceuticals and for pharmaceutical company drugs, and uncertainty about whether recent growth rates in pharmaceutical company costs are different from immediate past growth rates.
Abstract: The costs of developing the types of new drugs that have been pursued by traditional pharmaceutical firms have been estimated in a number of studies. However, similar analyses have not been published on the costs of developing the types of molecules on which biotech firms have focused. This study represents a first attempt to get a sense for the magnitude of the R&D costs associated with the discovery and development of new therapeutic biopharmaceuticals (specifically, recombinant proteins and monoclonal antibodies [mAbs]).
We utilize drug-specific data on cash outlays, development times, and success in obtaining regulatory marketing approval to estimate the average pre-tax R&D resource cost for biopharmaceuticals up to the point of initial US marketing approval (in year 2005 dollars). We found average out-of-pocket (cash outlay) cost estimates per approved biopharmaceutical of $198 million, $361 million, and $559 million for the preclinical period, the clinical period, and in total, respectively. Including the time costs associated with biopharmaceutical R&D, we found average capitalized cost estimates per approved biopharmaceutical of $615 million, $626 million, and $1241 million for the preclinical period, the clinical period, and in total, respectively. Adjusting previously published estimates of R&D costs for traditional pharmaceutical firms by using past growth rates for pharmaceutical company costs to correspond to the more recent period to which our biopharmaceutical data apply, we found that total out-of-pocket cost per approved biopharmaceutical was somewhat lower than for the pharmaceutical company data ($559 million vs $672 million). However, estimated total capitalized cost per approved new molecule was nearly the same for biopharmaceuticals as for the adjusted pharmaceutical company data ($1241 million versus $1318 million). The results should be viewed with some caution for now given a limited number of biopharmaceutical molecules with data on cash outlays, different therapeutic class distributions for biopharmaceuticals and for pharmaceutical company drugs, and uncertainty about whether recent growth rates in pharmaceutical company costs are different from immediate past growth rates. Copyright © 2007 John Wiley & Sons, Ltd.
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TL;DR: A detailed analysis based on comprehensive, recent, industry-wide data is presented to identify the relative contributions of each of the steps in the drug discovery and development process to overall R&D productivity and propose specific strategies that could have the most substantial impact in improving R &D productivity.
Abstract: The pharmaceutical industry is under growing pressure from a range of environmental issues, including major losses of revenue owing to patent expirations, increasingly cost-constrained healthcare systems and more demanding regulatory requirements. In our view, the key to tackling the challenges such issues pose to both the future viability of the pharmaceutical industry and advances in healthcare is to substantially increase the number and quality of innovative, cost-effective new medicines, without incurring unsustainable R&D costs. However, it is widely acknowledged that trends in industry R&D productivity have been moving in the opposite direction for a number of years. Here, we present a detailed analysis based on comprehensive, recent, industry-wide data to identify the relative contributions of each of the steps in the drug discovery and development process to overall R&D productivity. We then propose specific strategies that could have the most substantial impact in improving R&D productivity.
2,901 citations
TL;DR: The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms and used to estimate the average pre-tax cost of new drug and biologics development.
2,190 citations
Cites background or methods or result from "The cost of biopharmaceutical R&D: ..."
...The methodological approach used in this paper follows that used for our previous studies, although we apply additional statistical tests to the data (Hansen, 1979; DiMasi et al., 1991, 1995a,b, 2003, 2004; DiMasi and Grabowski, 2007)....
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...…clinical period cost per pproved compound was appreciably higher for small molecules, ith the ratio of costs nearly the same as we had estimated in a revious paper for an earlier period (DiMasi and Grabowski, 2007). ompete results are given and discussed in the online supplement Appendix B)....
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...They found a somewhat higher overall cost estimate ($1.2 billion in year 2000 dollars).4 In a paper authored by two of the authors of this study (DiMasi and Grabowski, 2007), we provided a first look at the costs of developing biotech products (specifically, recombinant proteins and monoclonal…...
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TL;DR: The most comprehensive survey of clinical success rates across the drug industry to date shows productivity may be even lower than previous estimates.
Abstract: The most comprehensive survey of clinical success rates across the drug industry to date shows productivity may be even lower than previous estimates.
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TL;DR: This review reports on the unexpected and considerable number of peptides that are currently available as drugs and the chemical strategies that were used to bring them into the market.
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TL;DR: Analysis of the record of pharmaceutical innovation by analysing data on the companies that introduced the ∼1,200 new drugs that have been approved by the FDA since 1950 shows that the new-drug output from pharmaceutical companies in this period has essentially been constant, and remains so despite the attempts to increase it.
Abstract: Despite unprecedented investment in pharmaceutical research and development (R&D), the number of new drugs approved by the US Food and Drug Administration (FDA) remains low. To help understand this conundrum, this article investigates the record of pharmaceutical innovation by analysing data on the companies that introduced the approximately 1,200 new drugs that have been approved by the FDA since 1950. This analysis shows that the new-drug output from pharmaceutical companies in this period has essentially been constant, and remains so despite the attempts to increase it. This suggests that, contrary to common perception, the new-drug output is not depressed, but may simply reflect the limitations of the current R&D model. The implications of these findings and options to achieve sustainability for the pharmaceutical industry are discussed.
1,056 citations
References
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TL;DR: The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms and used to estimate the average pre-tax cost of new drug development.
4,135 citations
"The cost of biopharmaceutical R&D: ..." refers background or methods or result in this paper
...For comparative purposes, we also show the corresponding figures for pharma from our most recent study of R&D costs for traditional pharmaceutical firms (DiMasi et al., 2003)....
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...As noted above, we use the estimate in DiMasi et al. (2003) for the time from discovery to first human testing....
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...Examining both actual approval dates for biotech compounds in the Tufts CSDD database and for those used in the DiMasi et al. (2003) sample, as well as average approval dates on which phase I testing began for biopharmaceutical compounds and for the data in DiMasi et al. (2003), suggested a shift…...
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...For comparative purposes we also show the pharma development time results from DiMasi et al. (2003)....
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...The methodology used for the analysis here is explained in detail in DiMasi et al. (2003)....
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TL;DR: Most monoclonal antibodies in clinical trials are owned by small biotech companies, but with blockbuster-sized revenues and approval rates higher than those for small-molecule drugs, that all may be set to change.
Abstract: Most monoclonal antibodies in clinical trials are owned by small biotech companies. But with blockbuster-sized revenues and approval rates higher than those for small-molecule drugs, that all may be set to change.
847 citations
TL;DR: The research and development costs of 93 randomly selected new chemical entities (NCEs) were obtained from a survey of 12 U.S.-owned pharmaceutical firms and used to estimate the pre-tax average cost of new drug development.
695 citations
Additional excerpts
...See, for example, DiMasi et al. (1991), DiMasi (1995), Gosse et al. (1996), DiMasi (2001), DiMasi et al. (2003)....
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TL;DR: It is necessary to select patients suitable for vaginal or laparoscopic mesh placement for use in the neonatal intensive care unit based on prior history and once they provide informed consent for surgery.
Abstract: Clinical Pharmacology & Therapeutics (2001) 69, 297–307; doi: 10.1067/mcp.2001.115446
451 citations
TL;DR: Examining the worldwide returns on R&D for drugs introduced into the US market in the first half of the 1990s reveals that a number of dynamic forces are currently at work in the industry, in particular,R&D costs as well as new drug introductions, sales and contribution margins increased significantly compared with their 1980s values.
Abstract: Background: Previously published research by the authors found that returns on research and development (RD indications that RD new market strategies of major firms aimed at simultaneous launches across world markets; and the increased attention focused on the pharmaceutical industry in the political arena. Objective: The aim of this study was to examine the worldwide returns on R&D for drugs introduced into the US market in the first half of the 1990s, given that there have been significant changes to the R&D environment for new medicines over the past decade or so. Results: Analysis of new drugs entering the market from 1990 to 1994 resulted in findings similar to those of the earlier research — pharmaceutical R&D is characterised by a highly skewed distribution of returns and a mean industry internal rate of return modestly in excess of the cost of capital. Conclusions: Although the distribution of returns on R&D for new drugs continues to be highly skewed, the analysis reveals that a number of dynamic forces are currently at work in the industry. In particular, R&D costs as well as new drug introductions, sales and contribution margins increased significantly compared with their 1980s values.
274 citations