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R&D Cost Cutting: Managing Cost Containment and Safeguarding Productivity
Business Insights, April 2009, Pages: 157
Report Overview
In recent years, drug developers have been under significant pressure to introduce new products while confronting escalating R&D costs, blockbuster patent expirations and heightened regulatory scrutiny. The current global economic climate has now intensified this pressure, creating new imperatives for manufacturers to cut costs. However, selecting and successfully implementing the most appropriate cost-cutting initiative is critical to avoid jeopardizing future productivity. ‘R&D Cost Cutting: Managing cost containment and safeguarding productivity' is a new report published by Business Insights that provides in-depth analysis of the benefits and risks surrounding leading R&D cost cutting strategies. This report analyses changes to drug development imperatives caused by increased financial restrictions, and uses detailed case studies to assess leading cost reducing approaches such as internal refocusing, outsourcing/offshoring and drug development alliances. The potential of industry-wide ‘information sharing' initiatives are also assessed. This report also compares the relative success of major companies' cost containment measures and forecasts how such initiatives will develop over the next five years.
Key Findings of this Business Insights' Report:
- Total US industry spending on R&D by all manufacturers reached a record high of $62.3bn in 2008, which equates to a direct cost per new molecular entity of more than $1.2bn. Similar cost trends are also being seen across Europe.
- Team consolidations have become an extremely popular method of improving R&D efficiency by optimizing the structure and objectives of working groups. Many companies have undertaken substantial reorganizations throughout 2008 and 2009.
- Drug development alliances are increasingly being used to leverage resources and cut R&D costs. Drug development deal values are expected to triple over the next few years as developers seek partners to reduce in-house spending.
- Schering-Plough and Novartis had the highest rates of R&D spending growth between 2006 and 2008, at 27.9% per year and 15.8% per year respectively. GSK and Merck registered the lowest growth rates, at -3.7% and -2.0% respectively.
- R&D cost cutting is expected to continue gaining pace through 2010, with reduced emphasis from 2011 to 2014. Outsourcing and drug development alliances will become key initiatives in the future.
Use this report to...
- Understand how the drug development imperatives of major players are changing in light of growing financial pressures and assess the factors that are driving healthcare cost containment across the globe.
- Identify the advantages and disadvantages of various R&D cost cutting initiatives with this report's detailed assessment and case study analysis of popular approaches including internal refocusing, outsourcing and drug development alliances.
- Evaluate the effectiveness of leading drug developers' cost cutting strategies by comparing product development rates and R&D costs between 2000-08 for AstraZeneca, BMS, Eli Lilly, GSK, Novartis, Pfizer, Sanofi-Aventis, Schering-Plough and Wyeth.
- Discover how cost reduction programs will evolve in the future with this report's forecasts for industry-wide R&D cost cutting developments in the short term (2009-2010) and long term (2011-2014).
Explore issues including...
- The rise of R&D cost cutting. Although cost cutting has not traditionally been a concern for R&D departments, the current economic climate has brought expense reduction programs into research labs. Most leading drug makers have recently undertaken, or are in the process of implementing, broad cost cutting programs.
- Productivity vs Cost Containment. Maintaining a high level of productivity is critical for drug makers to successfully continue introducing new products. Many R&D cost cutting programs will fail because they reduce current expenditure at the expense of future drug development.
- Broad cost initiatives are required. Merely reducing R&D staff numbers will not provide sufficient savings. Many companies were operating lean research groups before the recession began.
- The R&D revolution. The drug development industry is undergoing significant change which may permanently re-shape product development activities. Many experts believe that the industry is shrinking, with focus shifting from large budgets/research teams to smart approaches and leveraged resources. developments in the short term (2009-2010) and long term (2011-2014).
Discover...
- Why is R&D cost cutting rising?
- Which types of R&D cost cutting approaches are currently most common?
- Which forms of R&D cost cutting will increase in the future?
- What are the most common pitfalls of R&D cost cutting?
- Which major drug makers have achieved the highest past levels of productivity?
- Which major drug makers have achieved the lowest past levels of productivity?
- What growing trend could boost R&D productivity while containing costs?
- What could aid biotech drug developers by providing short-term cash?
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