Presentation (CTI)

OBJECTIVES: In a recent study, Schuhmacher et al. (2023) analysed the profitability of new drugs with respect to average R&D cost. Their analysis has two shortcomings. Firstly, average years on the market was only 5.4 years covering only part of the life-cycle. Secondly, it did not assess profitability with respect to total operating costs. The objective of this study is to address these shortcomings.
METHODS: Novel approved drugs from the top 20 pharmaceutical companies approved by the FDA between 2011 and 2020 have been included in the analysis. Worldwide product sales until 2024 were derived from annual reports. Products not reporting sales have been excluded. Products are categorized by average annual sales (US-$) as follows: mega-blockbuster >2.5b, blockbuster 1.0-2.5b, high-seller 0.5b-1.0b, medium-seller 0.1b-0.5b, low-seller <0.1b. Average R&D costs per drug are 1.34b US-$ (Wouters et al.2020); average R&D, production, sales and administration costs per drugs are calculated based on the R&D cost and the distribution of the operating expenses and amount to 5.56b US-$. Profitability was achieved, if cumulative sales exceed average costs.
RESULTS: 169 products have been identified, but only 144 reported product sales over 8 years on average. 42% (n=60) were (mega-)blockbusters accounting for 85% of sales. 41% of drugs were low- or medium sellers with average cumulative sales of 0.3b and 2.3b US-$, respectively. Therapy areas with most blockbusters were oncology (35%), infectious diseases (18%), cardiovascular and neurology (12% each). Within these areas 58% (infectious diseases, cardiovascular), 44% (neurology), 38% (oncology) of products were (mega-)blockbusters. Overall, 80% of drugs are R&D profitable and 52% are operating costs profitable.
CONCLUSIONS: Only approximately one in eight drugs in clinical development achieves regulatory approval. Only half of approved products cover average operating costs. Therefore, the pharmaceutical industry relies on blockbusters to mitigate the risks of clinical development and market failure.