Will investment in R&D pull pharma out of a funk?

Biopharma spending on drug research is climbing, even as the projected revenue for those products is falling. According to consultancy Deloitte, various factors are at fault, but the biggest ones but the biggest one is the adjustment an industry is making to a post-pandemic environment.

The post-pandemic environment is changing medicine and the way drugs are prescribed. While several new oncology drugs are being tested and approved, the costs still concern payers and patients.

According to Deloitte, projected returns on investment for late-stage pipeline assets rose to a record high in 2021. That trend has not continued. While several of those drugs forecast to have high value won regulatory approvals, most notably products for Covid-19, there’s been a gap in late-stage assets to continue the momentum. Projected returns from late-stage investments were projected to be just 1.2% in 2022, the lowest mark in over a decade.

The cost of developing a new drug has been rising steadily for many years. This is due to several factors, including the increasing complexity of drug discovery and development, the rising cost of clinical trials, and the need to recoup the high cost of research and development.

AI could help with new drug development, though.  AI is being used to accelerate drug discovery by identifying new drug targets and designing new molecules. AI is also being used to improve the efficiency of clinical trials.

The high cost of pharmaceutical R&D is a significant challenge for the industry. The cost of developing a new drug has been rising steadily for many years, and it is now estimated to cost $1 billion or more to bring a new drug to market. This high cost is a significant barrier to entry for new pharmaceutical companies, and it can make it difficult for pharmaceutical companies to recoup their R&D investment.

There is little doubt that the higher costs of R&D will lead to more expensive drugs when the political climate is turning against high drug costs. Will pharma be able to deliver innovative drugs that don’t cost a fortune or will Wall Street once again demand higher profits?