Abstract
To establish measures for improving the productivity of pharmaceutical R&D, we tested the academic efficiency of PharmaPipelines, a comprehensive database covering 77 companies worldwide for all observable pharmaceutical development projects. We found that the present database is sustainable for academic validation in terms of coverage and prediction accuracy through statistical validation. On reviewing project value allocations, the value-based assessment results provided essential implications as compared to conventional volume-based assessment, particularly for consolidated project value allocations for pharmaceutical and biotech companies with large market capitalization throughout the developmental phases. Furthermore, we confirmed that R&D productivity and scale are inversely proportional and clustering of the distribution pattern by company category. These observation results were obtained on the basis of economic value and are therefore expected to be valuable for strategic R&D planning at company level as well as providing a quantitative foundation for planning and validation of industrial research policies.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Bolten BM, DeGregorio T. Trends in development cycles. Nat Rev Drug Discovery. 2002;1:335–336.
Booth B, Zemmel R. Prospects for productivity. Nat Rev Drug Discovery. 2004;3:451–456.
Reichert JM. Trends in development and approval times for new therapeutics in the United States. Nat Rev Drug Discovery. 2003;2:695–702.
DiMasi JA, Grabowski HG, Vernon J. R&D costs and returns by therapeutic category. Drug Inf J. 2004;138:211–223.
Hartmann M, Hassan A. Application of real options analysis for pharmaceutical R&D project valuation—empirical results from a survey. Res Pol. 2006;35:343–354.
Girotra K, Terwiesch C, Ulrich KT. Valuing R&D projects in a portfolio: evidence from the pharmaceutical industry. Manage Sci. 2007;53:1452–1466.
Smith JE, Nau RF. Valuing risky projects: option pricing theory and decision analysis. Manage Sci. 1995;41:795–816.
Loch CH, Bode-Greuel K. Evaluating growth options as sources of value for pharmaceutical research projects. R&D Manage. 2001;31:231–244.
Black F, Scholes M. The pricing of options and corporate liabilities. J Pol Econ. 1973;81:637–659.
Merton RC. Theory of rational option pricing. Bell J Econ Manage Sci. 1973;4:141–183.
Copeland TE, Koller T, Murrin J. Valuation: Measuring and Managing the Value of Companies. New York: Wiley: 2000.
Vernon JM, Gusen P. Technical change and firm size: the pharmaceutical industry. Rev Econ Stat. 1974;56:294–302.
Graves SB, Langowitz NS. Innovative productivity and returns to scale in the pharmaceutical industry. Strategic Manage ). 1993;14:593–605.
Ministry of Health. Labour and Welfare of Japan. New Vision for the Pharmaceutical Industry: Aiming at the Industry With International Competitive Power Taking the Mission of Innovation. 2008:33–42.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Sengoku, S., Yoda, T. & Seki, A. Assessment of Pharmaceutical Research and Development Productivity with a Novel Net Present Value-based Project Database. Ther Innov Regul Sci 45, 175–185 (2011). https://doi.org/10.1177/009286151104500212
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1177/009286151104500212