Pharmaceutical R&D spending rises but output falls says new report available at

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R&D expenditure grew 6% CAGR from $26 billion in 2000 to $50 billion by the end of 2011. the leading website for market research reports has added a new report which says that low research and development (R&D) productivity, combined with the patent cliff and a stringent US Food and Drug Administration (FDA) approval process, is resulting in climbing expenditure without the corresponding output.

"Accelerating Drugs to Market - Despite Challenges, Adaptive Clinical Trials Reduce Drug Development Costs and Time to Market" says that, despite efforts made by pharmaceutical firms to cut down on costs, R&D expenditure expanded at a Compound Annual Growth Rate (CAGR) of 6% from $26 billion in 2000 to $50 billion by the end of 2011. Conversely, the number of new molecular entities (NME) approved during this same period has dropped on average, decreasing at a CAGR of 1%. R&D is a core and integral part of the pharmaceutical industry, but poor productivity means there may soon be a drought in the R&D pipeline. The study, published in September 2012, estimates that currently as much as 55% of the entire late stage pipeline is made up of life cycle management (LCM) projects, while a 28% share of the industry’s top 20 companies’ pipelines is devoted to LCM research.

The 63 page reports notes that the FDA has adopted a stricter drug approval policy following controversies regarding products such as Vioxx and Exubera. Additionally, the patent cliff has damaged company revenues, severely curbing the selling power of blockbuster medications and opening the market to generics. The reduction in NME approvals has meant the big pharmaceutical firms are less able to offset the loss of revenue resulting from patent expirations, with new drugs offering therapeutic superiority to the generic versions of their predecessors.

Code: GBI00452

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