The fruits of innovation in the pharmaceutical industry can transform health, improve lives and positively impact societies and economies. Much has been written about the need for pharma companies to innovate in order to survive—which ultimately means introducing new drugs to the market. However, the cost of R&D and the challenge of getting regulatory approval make the journey to innovation fraught with unknowns.
As an industry, innovation makes us who we are – it is in our DNA. It is how we use that ability that sets one company apart from another. Successful innovators know that the days when R&D passed the baton to the marketing team at approval are long gone: innovation must take place throughout every stage of every product’s lifecycle. Furthermore, innovation requires the ability to translate scientific rationale into meaningful clinical benefit at every stage of development. This type of innovation doesn’t shout as loudly to the industry commentator as breakthrough molecule discoveries. But this backdrop of constant ‘quiet innovation’ is what delivers results in an ever-stricter regulatory environment that is increasingly expensive to operate within. Importantly, not all of those results are to do with the bottom line.
The success of our innovation efforts cannot be guaranteed. It is estimated that only one in 20 new drugs achieves regulatory approval, and the R&D cost for a single drug is often quoted as a minimum of US$1bn (excluding costs not directly related to the approval process). Figures published in Forbes based on—admittedly relatively crude—calculations reassessed this figure. R&D expenditure by 100 pharma companies over 15 years was divided by the number of new drugs launched and approved over the same period. The results suggested that 44 of the 100 companies spent more than US$1bn on developing a single drug, and the development cost could reach US$13bn. Far from meaning that innovation isn’t worth it, however, these huge costs mean that it is more important than ever to do it right and never to lose sight of our goals.
Innovation with the potential to transform the treatment of diseases requires investment over the long-term. With commercial benefits taking years to realise, the focus for the pharma industry should be on improving the lives of patients rather than simply sales targets. For example, regenerative medicine, which replaces or regenerates human cells, tissues and even entire organs, could revolutionise the treatment of life-threatening diseases.. It could be years before regenerative medicine can be commercialised but that shouldn’t deter investment in this area.
Last year Astellas commissioned an independent survey to mark the inaugural Astellas Innovation Debate. From diverse industries, 500 European business leaders were asked whether they had experienced difficulty innovating over the past two years. Only 48% of pharmaceutical leaders said they had. Despite the economic and regulatory challenges the pharma industry faces, innovation endures. We have bold visions and we’re prepared to play the long game to achieve them.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
