The healthcare ecosystem is under significant price pressures at system and patient levels. Patient affordability is also under strain.
The patient affordability gap in developed markets would be an estimated $300B by 2028.
Almost 30% of US patients report not taking their medicine as prescribed due to cost.
Trends like these are contributing to profitability challenges and underperforming sales targets. These add to the urgency felt by biopharma leaders as they contend with the unsustainable economics of bringing medicines to market.
The cost of bringing a successful medicine to market is between $2.6B and $6.7B including the cost of capital and cost of failure.
The rising ratio of R&D spend per each new treatment approved, has increased 7% per approval annually over the last ten years.
Depending on the therapeutic area, treatment modality and disease complexity, the cost of bringing a new treatment to market is between $2.6B and $6.7B (including the cost of capital and cost of failure). The growing price pressures on the healthcare ecosystem mean that this cost must come down from billions to millions.
A central strategy for addressing these economics is to rethink how medicines are being discovered and developed – looking at how R&D can be modernized, using data, advanced analytics and technology, can boost innovation and productivity. Biopharma companies should intensify their focus on three strategic plays to affect change: New Science portfolio, digital and data-led research, and faster, smarter development.
Biopharma should intensify their focus on three strategic plays: New Science portfolio, digital and data-led research, and faster, smarter development.
Driving billions to millions
Three strategic plays suggest savings of $1.2-1.7B per successful treatment.
Accenture’s model suggests it will create additional revenue opportunities of $150-450M.
Our research model suggests that the three strategic plays will deliver savings of $1.2-1.7B per successful medicine (including the cost of capital and cost of failure) and will create additional future revenue opportunities of $150-450M.
Levers to reduce the cost of discovering and developing new treatments from billions to millions
Reduced cost of failure due to higher PTRS* achieved by digital biology
Reduced research costs due to the use of AI-driven predictive approaches to target validation, lead identification & optimization
Impact on clinical development costs due to clinical trial innovation to achieve maximum patient benefit, simplicity, optimal size & duration
Impact on clinical development costs due to regulatory innovation**
Reduced cost of failure due to the higher PTRS* of New Science
Reduced cost of failure due to higher PTRS* achieved by operating model changes to portfolio progression
*PTRS: Probability of technical and regulatory success
**While regulatory innovation does not significantly reduce cost, it is included as a lever due to its greater impact on revenue opportunities
To create the right environment needed to effectively enable the three strategic plays, companies must move away from siloed, incremental change and embrace full-scale transformation of the R&D pipeline and operations by:
Establishing enterprise-level strategy, budget, and oversight for strategic plays and enablers through redistribution of budget for the enterprise and tracking of value realization.
Creating asset-centered teams with the objective of delivering business and patient value. Companies will need to evolve how teams operate and align incentives to asset outcomes.
Assessing the current maturity of enabling capabilities and making coordinated cross-enterprise investments to be able to scale the strategic plays.
We believe biopharma can achieve greater value at speed by going through a “compressed transformation”, by simultaneously transforming R&D organizations and their portfolio across five enabling capabilities in what previously would have been sequential and siloed programs. This requires replatforming their businesses in the cloud, implementing digital & automation technologies while making operating model changes and reskilling their people all at once.
Biopharma companies are already in innovation mode. Now is the time to shift strategy and generate a new “future-fit” R&D organization.
A modernized holistic approach to transforming R&D would deploy strategic plays to generate a new “future-fit” biopharma R&D organization. Our research shows that this investment could bring discovery and development costs down from billions to millions—rewriting the productivity equation and enabling price reductions that broaden the access and impact of the coming wave of New Science treatments.
MANAGING DIRECTOR – LIFE SCIENCES, R&D STRATEGY LEAD
Nicole van Poppel, PhD
MANAGING DIRECTOR – LIFE SCIENCES, R&D DATA-LED TRANSFORMATION LEAD
SENIOR PRINCIPAL – GLOBAL LIFE SCIENCES RESEARCH LEAD