One particular type of data that life sciences companies have grown increasingly interested in is market data: 27% have moved towards basing decisions about product development more on the likelihood of market adoption and 30% expect to do so in the next three years. Overall, nearly six in ten fi rms believe that using data to model market trends would be of significant use in shaping innovation strategy. The reason is straightforward enough: “It is wonderful to bring drugs to market, but there has to be a market for those drugs,” says Dr Philip Gerbino, president of the Philadelphia-based University of the Sciences.
The issue, however, is not as simple as it seems. Brian Daniels, senior vice-president for global development and medical affairs at Bristol-Myers Squibb, describes it as “a real hornet’s nest”. The biggest difficulty, he explains, is the inherent unpredictability of drug sales. The industry is rife with stories of dramatic overestimates, and underestimates, by companies. Nature Drug Discovery estimates that market predictions are wrong about 80% of the time. In our survey, just 30% of respondents are confident that they use internal commercial data effectively in shaping R&D.
Despite these difficulties, our survey shows that an understanding of the market yields great rewards. Those companies that rate themselves above average on their ability to anticipate market demand for new products do better at development. Not only are they more likely to rank their innovation strategies as highly or very effective (64% compared with 42% for the rest of the survey), they also produce more commercially viable products (5.9 over the last three years on average compared with 3.4 for the rest). Even this group, however, has substantial room for improvement: just 44% say that they use their market data effectively with respect to R&D.
For further information on this issue, please see the Economist Intelligence Unit article, How can a market perspective help biopharma R&D?, which examines in greater detail how companies can benefit from such analysis.
