Comprehensive measurement of biopharmaceutical R&D investment
Nature Reviews Drug Discovery, August 2024
The discovery and commercialization of new drugs to improve patient outcomes require substantial investment in research and development (R&D), and there is considerable policy interest in understanding both the level and the productivity of existing R&D efforts. However, conventional measures of R&D investment across the biopharmaceutical industry may tell an incomplete story: They often rely on survey data about investments made by large publicly traded companies and ignore the investments of small, development-stage, and private companies. Such a focus can yield an inaccurate picture of R&D investment activity in the biopharmaceutical ecosystem, which could in turn affect related measures of investment intensity and productivity.
To get a clearer view of global biopharmaceutical R&D investment, an Analysis Group team led by Managing Principal Noam Kirson, Vice President John Drum, Manager Samuel Spare, and Associates Michael Daly and Henry Mirsberger collaborated with academic affiliate Amitabh Chandra and researchers from Johnson & Johnson Innovative Medicines to establish a new measurement methodology. In an article describing their research, the authors discuss some of the potential issues with using conventional measures to assess biopharmaceutical R&D investments; detail their own method for such measurement and analysis; and provide some key takeaways from their assessment, which include a more comprehensive group of companies as compared to other datasets. The authors find that approximately one quarter of R&D investment occurs at development-stage companies, and that “ignoring the share of investment in smaller, nonpublic companies probably understates contemporary estimates of biopharmaceutical R&D by at least $25 billion.” As a remedy, they propose their more comprehensive and consistent method, which could be used in future research to assess trends in R&D investment over time, activity in various submarkets, and the impact of policy decisions.
The article, “Comprehensive measurement of biopharmaceutical R&D investment,” was published in Nature Reviews Drug Discovery.
Authors
Chandra A, Drum J, Daly M, Mirsberger H, Spare S, Neumann U, Martin S, Kirson N