By Ben Hirschler
LONDON (Reuters) - The number of new drugs approved for sale by regulators may be rising but manufacturers are still struggling to get a decent bang for their research buck, according to a report on Tuesday.
The global pharmaceuticals industry is trying to replenish its medicine chest after a wave of patent expiries that peaked in 2012. Optimism has been growing that the industry might have been getting the formula right as more products, especially for cancer and rare diseases, win approval.
The latest annual productivity study by Deloitte and Thomson Reuters, however, reveals a continuing decline in projected returns on investment in late-stage drug research and development (R&D).
For 2013, the average internal rate of return (IRR) from R&D was estimated at just 4.8 percent, down from 7.2 percent last year and 10.5 percent in 2010. Over the same four-year period, the average cost of developing new medicines has risen by 18 percent to $1.3 billion (£794.6 million), the study added.
Significantly, the average forecast peak sales of each new drug has dropped by 43 percent to $466 million in 2013 from $816 million in 2010, reflecting the impact of austerity measures on health spending, plus a shift to more niche drugs.
Although the figures paint a picture of overall decline, the average does hide a big divide in performance between leaders and laggards, with five of the 12 companies having a projected R&D return of more than 7 percent this year.
The difference in R&D success rates is evident in the wide variation in the cost of developing a new drug for different companies. Since the figure includes money spent on drugs that ultimately fail, the most successful firms have lower costs.
For the best performing company in the group, the average cost of developing a drug in 2013 was just $393 million, while at the other extreme one firm spent $3.08 billion.
The companies analysed in the study were Pfizer (NYS:PFE), Roche (VTX:ROG), Novartis (VTX:NOVN), Sanofi (PAR:SAN), GlaxoSmithKline (LSE:GSK), Johnson & Johnson (NYS:JNJ), AstraZeneca (LSE:AZN), Merck & Co (NYS:MRK), Eli Lilly (NYS:LLY), Bristol-Myers Squibb (NYS:BMY), Takeda <4502.T> and Amgen (NSQ:AMGN).
The study calculated IRRs for these companies by estimating the future value of sales from products in final-stage Phase III clinical trials, or those submitted for regulatory approval, using standard industry benchmarks for success rates.
Results for individual companies were not disclosed.
(Editing by Mark Heinrich)