As of April 2023, the global pharmaceutical R&D pipeline has over 6000 molecules in active clinical development phase, showing a 5.8% increase from 2022. However, the pharma/biopharma industry overall shows stagnant R&D activity. Total R&D expenditure is approximately $276.81 billion, with a modest 2.5% growth from 2023 to 2024.
The Pharma industry is facing a declining average return on investment (ROI) for R&D, dropping to 1.2%, and peak sales per asset hovering just above $350 million. This underscores the urgency to streamline drug development with newer technologies. Surprisingly, the top 10 pharma companies contribute only 4-5% to the R&D pipeline, while the top 25 contribute less than 10%. Conversely, small-to-mid, and emerging biopharma players, with 1 or 2 molecules in the pipeline, contribute over 16%. This is fueling the growing demand for outsourcing, with contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs) driving industry growth. Overall, advancements in multiple emerging biotechnology platforms (such as RNA technology, protein degradation – proteolysis targeting chimeric [PROTAC] technology, and antibody engineering technologies) coupled with the application of digital health technologies in the form of artificial intelligence (AI) and machine learning (ML) are supporting unprecedented innovation, ascertaining increased success of a molecule, further improving the partnership landscape across the global drug discovery and preclinical development industry.
Are you aware of the upcoming transformation in drug discovery and the strategic imperatives driving this change?
Explore our latest analysis on “Growth Opportunities in Drug Discovery and Early Development Outsourcing Services,” by clicking here
Here’s an exploration of the 10 strategic imperatives that are steering this change in the drug discovery industry.
- Disruptive Technologies: Leveraging CRISPR for Targeted Drug Therapies
Utilizing CRISPR gene editing to develop targeted therapies for genetic disorders, revolutionizing treatment options and improving patient outcomes.
- Transformative Megatrends: Addressing the Needs of an Aging Population
Adapting drug development strategies to meet the rising demand for treatments targeting age-related diseases, driven by the global aging population.
- Competitive Intensity: Pursuing Cross-Industry Collaborations
Forging partnerships between pharmaceutical and technology companies to innovate and streamline drug development processes, creating competitive advantages.
- Internal Challenges: Navigating AI Ethics in Healthcare
Establishing ethical guidelines for using AI in handling sensitive patient data, ensuring privacy and compliance while harnessing AI’s potential for improved healthcare outcomes.
- Compression of Value Chains: Integrating AI in Diagnostics for Speed and Precision
Implementing AI tools in diagnostic processes to accelerate disease identification and customize treatment plans, enhancing the efficiency of drug discovery.
- Internal Challenges: Fostering Interdisciplinary Collaboration in R&D
Overcoming challenges in integrating diverse scientific disciplines within R&D teams to drive innovation and improve the success rate of drug development.
- Disruptive Technologies: Adopting Quantum Computing for Drug Discovery
Utilizing quantum computing to enhance molecular simulations, significantly speeding up the drug discovery process and improving accuracy in developing new treatments.
- Innovative Business Models: Exploring AI-Driven Personalized Medicine Models
Developing subscription-based services offering AI-driven personalized treatment plans tailored to individual genetic data, creating new business models in healthcare.
- Competitive Intensity: Investing in AI-Driven Drug Discovery Platforms
Focusing on AI platforms that reduce the time and cost of drug discovery, providing a competitive edge over traditional R&D methods.
- Industrial Convergence: Capitalizing on Tech Industry Convergence
Collaborating with tech companies entering the pharmaceutical space, leveraging AI and big data analytics to innovate and stay ahead in a rapidly evolving industry.
Has your team identified the growth opportunities associated with these strategic imperatives?
If not, do not worry, Frost & Sullivan’s team of growth experts is here to coach you in identifying the strategic imperatives impacting your organization and the growth opportunities that emerge from addressing these imperatives.
Click here to engage with our Growth Experts
