High r&d spend may not lead to innovation and productivity, says report

The assumption that companies with a high r&d spend will be the most innovative and productive may not be correct, according to a new report on global pharmaceutical r&d from Urch Publishing.

'Although r&d investment by the pharma industry has been on the increase, the number of novel drugs reaching the global market has been on the decline,' said the report's author Dr F Kermani, an industry analyst.

In 2002, only 28 totally novel drugs were launched onto the world market, nearly half of the corresponding figure for 1997, according to the report, Research & Development in the Pharmaceutical Industry - Options for Success. 'The success of the pharmaceutical industry is based on significant investment in r&d, much of which is upfront before a company is in a position to market a product,' Dr Kermani points out.

'The eventual aim of the company is to be able to finance its r&d entirely by reinvestment of profits generated through pharmaceutical sales. As the general public begin to question industry prices it is important for companies to be able to justify their commercial strategies by highlighting the investment they must make to bring a new drug successfully to market.'

The report, which asses the critical factors characteristic of a successful r&d organisation and the regulatory and economic environment necessary for r&d to prosper, also found that:

industry players are optimistic that drug development times can be reduced;

focus on therapeutic areas to concentrate research efforts is crucial to long-term success;

generics, and now biogenerics, will continue to be a growth sector;

biotechnology companies will continue to be the source of new drugs;

careful management of alliances with drug development/biotechnology companies ensures value for money;

companies must have appropriate systems in place to maximise R&D productivity.

By taking the right decision in the discovery and development of products and terminating unsuccessful drugs early, companies will be able to allocate resources more effectively and expedite development, the report says. Many companies are restructuring their r&d processes in order to optimise the selection of compounds and information flow across the discovery and development interface. An increasing number of companies have sought collaborations with other companies to spread the risks and costs associated with incorporating new technologies.