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Area of Science:

  • Pharmaceutical industry
  • Drug discovery and development
  • Innovation management

Background:

  • The efficiency of pharmaceutical research and development (R&D) has been declining for decades.
  • New drugs addressing unmet medical needs are crucial for research-based pharmaceutical companies.
  • Declining R&D efficiency challenges the traditional innovation-driven industry model.

Purpose of the Study:

  • To identify and analyze factors impacting pharmaceutical R&D efficiency.
  • To describe key challenges and success factors for sustainable R&D output.
  • To explore strategies companies employ to enhance R&D efficiency.

Main Methods:

  • Review of R&D models of major research-based pharmaceutical companies using publicly available information.
  • Analysis of key challenges and success factors for sustainable R&D output.
  • Calculation of R&D efficiencies for major pharmaceutical companies (USD 3.2-32.3 billion, 2006-2014).

Main Results:

  • Pharmaceutical R&D efficiencies were calculated to be in the range of USD 3.2-32.3 billion between 2006 and 2014.
  • Companies are implementing strategies to reduce portfolio and project risk (e.g., portfolio management, licensing).
  • Cost reduction measures include outsourcing and risk-sharing in late-stage development.
  • Open innovation approaches (e.g., open source, innovation centers, crowdsourcing) are key to increasing innovation potential.

Conclusions:

  • Research-based pharmaceutical companies must understand factors influencing innovation rate, R&D cost, and success probability.
  • Companies can adopt different open innovation roles: knowledge creator, integrator, or leverager.
  • Strategic alignment of company strategy and R&D setup is crucial for optimizing R&D efficiency.