Pharmaceutical R&D Productivity: The Path to Innovation examines the convergence of scientific, regulatory, social, political, and economic factors that are inhibiting the development of new molecular entities (NMEs), resulting in the current discovery deficit that threatens the pharmaceutical industry and the delivery of healthcare as we know it.

Based on more than 20 probing interviews with key industry executives, this report takes a refreshing look at the core problems plaguing the pharmaceutical industry and offers potential solutions toward securing the future of innovative drug discovery and development. Analysis points include the following:

Integrating new technologies into the R&D, marketing, and reimbursement stages has proven to be extremely difficult. The introduction of so many new technologies during the 1990s has diverted attention and valuable resources from the traditional methods of developing new pharmaceuticals. The report points out that there will be a necessary lag between the integration of new research techniques like combinatorial chemistry and genomics and the resulting spike in productivity. The impacts of 3 major R&D enabling technologies are assessed, and the issues associated with successfully translating new technologies into validated, profitable, and accepted medicines are evaluated.

The world pharmaceutical industry has taken a wrong turn in its choice of management techniques with the result that creativity has been inhibited. The report looks at changes in the management structures of large pharmaceutical companies and identifies some of the mistakes made by industry management in the past. Several organizational and functional management models are evaluated.

The frenzy of mergers and acquisitions (M&As) in the late 1980s and early 1990s led to severe diseconomies of scale in the industry. The M&As led to such upheaval in the personal and professional lives of R&D scientists that morale has suffered. The report examines the culture and typology of R&D scientists, the academic versus the applied science mindset, the mechanisms of scientific creativity, and the kinds of incentives and organizational structures that motivate scientists to do their best work.

Innovation as measured by NME output has dropped in Europe and Japan . The report identifies increasing regulation, low profitability, the growth of antiscience attitudes in Europe , and the economic downturn in Japan as contributing factors in the global decline in R&D productivity. It also analyzes trends in patent applications and explains why variability in the enforcement of world patent agreements has affected the pharmaceutical industry’s willingness to innovate. The report also examines the U.S. Regulatory situation, outlining the role and development of the FDA in particular, as well as the safety-related problems that struck the pharmaceutical industry and the FDA in 2004 and the spring of 2005—an ongoing development that will likely exert a chastening effect on new product development. Finally, drug prices worldwide have been subject to consistent downward pressure, reducing motivation to innovate.

The high cost of bringing an NME to market reinforces the blockbuster mindset The blockbuster model restricts the choice of disease targets, ill-serves small-population chronic diseases, and ignores the economic advantages of personalized medicine to reduce drug costs, attrition rates, adverse drug reactions, and patient noncompliance. The report also offers a critique of the Tufts and Bain models of R&D costs.

Pharmaceutical R&D Productivity: The Path To Innovation provides case studies of how these and other productivity issues have played out at major global pharmas, especially focusing on GlaxoSmithKline and Sanofi-Aventis. It concludes with four possible scenarios for the future.

About the Authors

Bryan Reuben is professor emeritus of chemical technology at London South Bank University. He obtained his M.A., M.Sc., and D.Phil. degrees from Queen’s College, Oxford , and held a postdoctoral Fellowship at Brookhaven National Laboratory. He has worked with the consultancies REMIT Ltd., the Economists Advisory Group, and Decision Resources, and has published numerous books with Michael Burstall and Harold Wittcoff pertaining to the technology and economics of the chemical and pharmaceutical industries. In addition, he remains a mainstream scientist who has engaged in recent work on the separation of the antibiotic nisin from fermentation broth and the structure of protonated amino acid clusters.

Tragically, Michael Burstall died during the early stages of this project, but his influence permeates it. Mike was educated at Brasenose College , Oxford , and worked with Proctor & Gamble both in England and the United States . He lectured for many years at the University of Surrey and worked with several consultancies: the Economists Advisory Group, REMIT, and Decision Resources. He is sadly missed, both as colleague and friend.