R&D Cost Cutting: Managing Cost Containment and Safeguarding Productivity
Scripp 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?
- R&D cost cutting Executive summary
- Introduction
- Drug development imperatives
- Internal focusing to cut R&D costs
- Outsourcing to cut R&D costs
- Cutting R&D costs with drug development alliances
- Industry wide initiatives to cut R&D costs
- Successes and failures in R&D cost cutting
- Future R&D cost containment strategies
Introduction
- Summary
- The drug approval process
- United States
- Europe
- The mutual recognition procedure
- The national competent authorities
- Increasing financial pressure
- Expiring patents on blockbusters
- Health care cost containment
- The rise of generics
- Elimination of coverage
- Step therapy
- Utilization of OTC medications
- The global financial market downturn
Drug development imperatives
- Summary
- Drug development imperatives
- Targeting large markets
- Flight to efficacy
- Decreasing time to market
- Drug development hurdles
- More sophisticated science
- More complicated disease targets
- Rapidly escalating costs
- Declining R&D productivity
- Conclusions
Internal refocusing to cut R&D costs
- Summary
- Introduction
- Staff reductions
- Case study: Merck & Co
- Team consolidations
- Case study: Wyeth
- Case study: Pfizer
- Offshoring
- Repositioning
- Combination products
- Conclusions
Outsourcing to cut R&D costs
- Summary
- The rising importance of CROs
- Services offered by CROs
- The role of CROs in clinical trials
- The role of CROs in pre-clinical trials
- Trade-offs of using a CRO
- Long-term cost savings vs. high short term expenses
- Personnel customization vs. CROs' high staff turnover
- Flexibility vs. loss of control
- Types of relationships with CROs
- Preferred vendors
- Functional service providers
- Risk sharers
- Drug licensors
- White knights
- Offshore outsourcing
- Level of R&D outsourcing
- Case study: Eli Lilly
- Conclusions
Cutting R&D costs with drug development alliances
- Summary
- Introduction
- Pharma-pharma alliances
- Reasons for cooperation between competitors
- Types of pharma-pharma drug development alliances
- Pharma-pharma licensing alliances
- Case study: Valeant Pharmaceuticals
- Pharma-pharma drug development alliances
- Pharma-pharma offshore alliances
- Case-study: Ranbaxy
- Pharma-biotech alliances
- The synergy between pharmaceutical and biotech companies
- Types of pharma-biotech alliances
- Pharma-biotech licensing deals
- Case study: Wyeth
- Pharma-biotech joint ventures
- Pharma-biotech offshore alliances
- Volume and value of alliances
- Conclusions
Industry wide initiatives to cut R&D costs
- Summary
- Introduction
- Information sharing initiatives
- Cancer drug database
- Clinical trial recruitment aids
- Government bailout
- Conclusions
Successes and failures in R&D cost cutting
- Summary
- Introduction
- Comparison of major players
- AstraZeneca
- Bristol-Myers Squibb
- Eli Lilly
- GlaxoSmithKline
- Novartis
- Pfizer
- Sanofi-Aventis
- Schering-Plough
- Wyeth
- Conclusion
Future R&D cost containment strategies
- Summary
- Introduction
- Near term initiatives: 2009 and 2010
- Internal refocusing
- Outsourcing R&D
- Drug development alliances
- Industry-wide initiatives
- Long term initiatives: 2011 and 2014
- Internal refocusing
- Outsourcing
- Drug development alliances
- Industry-wide initiatives
- Conclusions
Index
List of Figures
Figure 1.1: Cost containment initiatives
Figure 1.2: Pharma companies financial performance 2006-2008
Figure 2.3: Insert figuretitlehere, with date where appropriate
Figure 2.4: US R&D Spend per NME Approval by Year, 1990 – 2008
Figure 3.5: Merck Revenues vs. R&D Budget, 2000 - 2008
Figure 4.6: Potential Advantages and Disadvantages of Using a CRO, 2009
Figure 4.7: Utilization of Preferred Outsourcing Vendors by Type of Drug Developer, 2008
Figure 4.8: Advantages and disadvantages of international outsourcing
Figure 5.9: Pharma-Pharma vs. Pharma-Biotech alliances
Figure 5.10: Drug development deal value, 1998 - 2008
Figure 7.11: Drug Developer R&D Productivity, 2000 - 2008
Figure 8.12: R&D Cost Cutting Initiatives, 2009 and 2010
Figure 8.13: R&D Cost Cutting Initiatives, 2011 - 2014
List of Tables
Table 1.1: CDER Advisory Committees, 2009
Table 1.2: Leading European National Competent Authorities, 2009
Table 1.3: Generic erosion rates 5 quarters after launch of generics
Table 1.4: Revenues and Patent Expirations for Selected Companies' Blockbusters, 2008
Table 1.5: Pharma company revenues, 2007 – 2009
Table 1.6: Pharma company share prices, 2007 – 2009
Table 2.7: Leading medicinal research areas by global prevalence - 2009
Table 2.8: US New Molecular Entity (NME) Approvals, 2000 - 2008
Table 2.9: US New Molecular Entity (NME) Approvals, 1990 - 2008
Table 3.10: Advantages and Disadvantages of Refocusing Approaches, 2009
Table 3.11: Significant R&D Team Consolidations, 2008 – 2009
Table 3.12: Sales and R&D activities of leading foreign pharmas in China, 2008
Table 3.13: Sales and R&D activities of leading foreign pharmas in China, 2008 (cont'd)
Table 3.14: Sales and R&D activities of leading foreign pharmas in India, 2008
Table 3.15: Sales and R&D activities of leading foreign pharmas in India, 2008 (cont'd)
Table 3.16: Selected combination products introduced in the US, 2000 - 2008
Table 3.17: Selected repositioning specialists
Table 4.18: Summary of drug testing objectives by phase, 2009
Table 4.19: Key Characteristics of CRO Partnering Relationships
Table 7.20: Average R&D Productivity by Company, 2000 - 2008
Table 7.21: R&D Productivity for AstraZeneca, 2000 - 2008
Table 7.22: R&D Productivity for Bristol-Myers Squibb, 2000 - 2008
Table 7.23: R&D Productivity for Eli Lilly, 2000 - 2008
Table 7.24: R&D Productivity for GlaxoSmithKline, 2000 - 2008
Table 7.25: R&D Productivity for Novartis, 2000 - 2008
Table 7.26: R&D Productivity for Pfizer, 2000 - 2008
Table 7.27: R&D Productivity for Sanofi-Aventis, 2000 - 2008
Table 7.28: R&D Productivity for Schering-Plough, 2000 - 2008
Table 7.29: R&D Productivity for Wyeth, 2000 - 2008
- AstraZeneca
- Bristol-Myers Squibb
- Eli Lilly
- GlaxoSmithKline
- Novartis
- Pfizer
- Sanofi-Aventis
- Schering-Plough
- Wyeth
Product Samples
A sample for this product is available. Please Login/Register to download this sample.
Customers who bought this item also bought
All rights reserved. © Copyright 2013 Research and Markets WWW5
Terms and Conditions Privacy Policy Publishers Employment Opportunities Site Map Link to us Webmaster Affiliate Network
