Pharma R&D Innovations:Need of the Time
Global Pharma Researh & Development (R&D) spend has witnessed the annual growth rate of about 10% each year in the last three years but for next three years it is forecasted to grow annually at mere 2%. On an average, the Pharma companies annually spend 20% of their sales revenue on R&D activities. The growth in annual sales revenue will be under pressure on account of patent expiry of money spinner drugs in next couple of years. For example, patent for Lipitor (Cholesterol management drug) often referred to as billion dollar pill is set to expire next year. Inspite of the challenges, Pharma companies are planning to sustain to the almost same levels of annual R&D budget with minor yearly increase for next three to four years. Clearly there is a growing concern and strategies are being put in place to derive more mileage from R&D.
Pharma companies have to innvoate the R&D strategies to include new ideas. One such idea is the joint drug development through alliance or consortium of Pharma companies. Though the idea may seem counter productive as Pharma companies are competitors to each other in global market but it may make sense to explore it on selective basis to limit the R&D spend and achieve better results through sharing of resources. Not only it will speed up the time to market but will also offer better return on investment for the participating companies. High Investment research areas like developing technology for targeted therapies using nanotechnology are the potential areas. Once technology is developed the participating companies can use it individually or jointly to develop drugs for specific treatments. Gene therapies are other possible candidates for shared research as it is foreseen to be the treatment of future.
Other idea would be to include developing drugs for neglected diseases. This segment can be potential revenue source as increased awareness and information influences affected population to seek treatments. Lifestyle diseases and localized regional diseases froms part of this segment.
Outsourcing of research activities is also seen as one of the way to speed up the research and development activities. Established and non- confidential parts of the research process can be outsourced. This trend will continue to gain prominence as Contract Research Organizations (CROs) in low cost economies like India and China have emerged as mature entities to cater to the research and managing clinical trial needs from Global Pharma companies. R&D outsourcing will reduce time to market for the new drugs and will free internal resources to focus upon core function of new drug discovery and development.
Increased uses of technology and advancements in computing have proved useful in drug development and related simulations. Increased use of CAD/CAE in rapid and virtual prototyping Pharma companies should continue to invest in this realm and be at the forefront of the latest technology. The key visibility from management perspective will be to track R&D spend, Performance of R&D Programs and Projects, Process & Product Lifecycle Management. In one of my next blog, I will discuss how IT can be used effectively for bringing efficiency in R&D processes.
