Low productivity = uncertainty.
When the productivity decreases,
so does predictability.
The development of new drugs is plagued by uncertainty.
The results of drug development projects are uncertain.
The time it takes to develop new drugs is uncertain.
The budget needed to develop a new drug is uncertain.
The cost of uncertainty
Poor efficiency and great uncertainty translate into poor returns of investments in the development of new pharmaceutical products.
The ROI of drug development
Deloitte has tracked the return on investment of drug development since 2010. This critical metric of success has steadily decreased for 10 years to reach 1.5% in 2019. This can be explained by the inadequacy of traditional drug discovery processes to handle increasing product complexity.
The trend appears to have reversed in 2020 and 2021 as the industry transformed its processes to take advantage of digital technologies.
Oversized R&D Budgets
According to the Congressional Budget Office, pharmaceutical companies have devoted a growing share of their net revenues to R&D activities, averaging about 19 percent over the past two decades. By comparison, other research-intensive industries, like software and semiconductors, averaged about 15 percent.