How to improve R&D productivity: the pharmaceutical industry's grand challenge

The biopharmaceutical industry is facing unprecedented challenges to its fundamental business model and currently cannot sustain sufficient innovation to replace its products and revenues lost due to patent expirations.The number of truly innovative new medicines approved by regulatory agencies such as the US Food and Drug Administration has declined substantially despite continued increases in R&D spending, raising the current cost of each new molecular entity (NME) to approximately US$1.8 billionDeclining R&D productivity is arguably the most important challenge the industry faces and thus improving R&D productivity is its most important priority.A detailed analysis of the key elements that determine overall R&D productivity and the cost to successfully develop an NME reveals exactly where (and to what degree) R&D productivity can (and must) be improved.Reducing late-stage (Phase II and III) attrition rates and cycle times during drug development are among the key requirements for improving R&D productivity.To achieve the necessary increase in R&D productivity, R&D investments, both financial and intellectual, must be focused on the 'sweet spot' of drug discovery and early clinical development, from target selection to clinical proof-of-concept.The transformation from a traditional biopharmaceutical FIPCo (fully integrated pharmaceutical company) to a FIPNet (fully integrated pharmaceutical network) should allow a given R&D organization to 'play bigger than its size' and to more affordably fund the necessary number and quality of pipeline assets.