As the pharma industry rethinks the way it brings new drugs to market, drugmakers around the world haven't backed down from their multibillion-dollar research budgets. The Pharmaceutical Research and Manufacturers of America (PhRMA) revealed yesterday that its global membership of most of the largest drugmakers spent an estimated $49.5 billion on R&D in 2011.
The estimated sum fell slightly from the $50.7 billion that PhRMA members invested in 2010, but the real story appears to be how drugmakers are changing the ways they dedicate R&D dollars and whether they are getting their money's worth. More than ever, biopharma companies are spreading their R&D bets with a variety of experts and other companies outside of their organizations, and most of the companies are emphasizing research on targeted drugs and personalized therapies, according to PhRMA.
Much has been written about how drugmakers have altered their R&D strategies and spending habits in the face of a rash of patents expiring on blockbuster brands. Sanofi ($SNY) and AstraZeneca ($AZN), for instance, have called on their R&D chiefs to build a greater percentage of the companies' respective pipelines via partnerships, and Pfizer ($PFE) has taken an axe to some of its research operations and narrowed its R&D focus. All these companies are grappling with patent cliffs, and they desperately need their R&D bets to pay off in the coming years.
Last year, as PhRMA noted, the FDA stamped approvals on 35 new medicines, including Merck's ($MRK) and Vertex's ($VRTX) hepatitis C drugs, 11 treatments for rare diseases and the first new med for lupus since 1955, Human Genome Sciences' ($HGSI) Benlysta. Yet one could argue that the sales of new drugs aren't supporting the mammoth investments in R&D that have been made over the past decade. The industry group estimates that the cost of bringing a new drug to market is about $1.2 billion, and, depending on how you do the math, the sum could be much higher.
Companies are also taking more shots on goal in the clinic. According to PhRMA, there are now more than 3,200 meds in trials or under FDA review, a big jump from the 2,400 drugs in development in 2005 (when its members spent $39.9 billion on R&D).
The industry is holding out hope that the emergence of new genomics and computational tools as well as newfangled strategies to improve ROI on R&D spending could boost productivity in drug research. And the confluence of these elements is in personalized medicine R&D, where deeper understandings of the drivers of individual patients' illnesses are being translated into new drugs for cancer and other diseases. Tufts University Center for the Study of Drug Development surveyed biopharma companies and learned that 94% were pursuing personalized treatments.
Drugmakers' ambition in personalized medicine isn't a new story in the biopharma industry, of course, but actually realizing those ambitions would be a major step forward. Then drugmakers could feel like their huge R&D budgets were worth the investment.