Drug-to-market cost falls to under $2bn in five years

Bringing a drug to market is costing companies under $2 billion for the first time in five years, according to a report from IP service provider Clarivate Analytics.

In the “2019 Centre for Medicines Research (CMR) International Pharmaceutical R&D Factbook” released yesterday, September 26, Clarivate said that there were two main factors causing the increase in drug approvals and subsequent decrease in cost per new molecular entity (NME).

First is the increased focus on rare diseases—of the 57 NMEs launched in 2018, 22 had an orphan drug designation, indicating that they targeted a rare disease.

Second is the uptick in activity from smaller pharmaceutical companies. In 2018, 74% of drug launches were developed by companies with a research and development (R&D) spend of $700 million to $2 billion which, according to Clarivate, is almost double the contribution this group made in 2009.

Major pharma companies (with an R&D spend of greater than $2 billion) accounted for just 26% of drug launches.

However, while the number of drug approvals is up, “estimated sales per approval” is declining.

Clarivate reported that the average peak sales per asset almost halved between 2015 and 2018, which indicates older and legacy products continue to make up the vast majority of global sales (accounting for more than 85% worldwide).

Additionally, the new drug approvals continue to target smaller patient populations with the number of addressable patients per drug approval decreasing by 15% between 2010 and 2018.

Clarivate’s report also looked into pharmaceutical companies’ investment strategies and found that, in the first half of 2019, global spend for pharma M&A and licensing activities was nearly $140 billion. This outpaced projected 2019 R&D spend by more than 60%, said the report.

Mukhtar Ahmed, president of the science group at Clarivate Analytics, said: “It is extremely encouraging to see the increase in new drug approvals driven by smaller pharma companies. This suggests size is no longer a prerequisite to bring a drug to market and R&D programmes are becoming more efficient.”

But he added that it was concerning that forecasted sales per approval are declining.

“Even though the overall volume of new approvals is healthy, this raises questions about long term sustainability, particularly for large pharma,” warned Ahmed.

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