Research in pharma less and less profitable, economic return as little as 3%

The economic return from R&D for large drugmakers is steadily shrinking and many relevant groups prefer acquiring companies with strong pipelines and interesting products rather than performing inward investment in novel R&D programs. Deloitte Consulting has recently published a study showing that the economic return from R&D programs for the 12 largest pharmaceutical companies decreased from 10% to 3% over the last years. A representative example for this is GSK, which generates 57% of its revenues by selling pharmaceutical products, and the rest through its Consumer Health and Vaccines divisions. The new CEO of the UK-based group, Emma Walmsley, seems to prefer investing in Consumer Health and in patent-free vaccines–not exposed to patent expiry–and reducing the commitment in traditional drug development. This explains why GSK is targeting Pfizer’s Consumer Health division ($20bn)–indeed, it seems unlikely that GSK can soon produce a candidate to replace blockbuster Advair, which has recently lost its patent protection.
(Source: FT)