NCPA - National Center for Policy Analysis

Despite More Research Spending, Fewer New Drugs Emerging

April 19, 2002

The pharmaceutical industry's output of new drugs has been declining in recent years -- despite record investments in research and development, and the unlocking of the human genome. Experts see a clear fall-off in the industry's productivity.

  • The output of new drugs has risen only modestly in the past two decades, even though spending for research and development has increased more than sixfold -- to in excess of $30 billion annually, after adjusting for inflation.
  • Drug makers have said earnings will be lower than expected this year -- in part because there are not enough new products to offset declining sales of old ones that lose patent protection and face competition from generic versions.
  • The time spent to develop a new drug -- not counting time spent in government reviews -- has lengthened to more than 11 years from the nine years needed in the 1980s.
  • Development costs have more than doubled -- after inflation -- to an average $800 million.

Only one in about 5,000 early drug candidates and only one in five drugs that enter clinical trials ever reach market shelves.

Industry officials call the odds against new drugs "just dreadful."

Still, the new understanding of genomics and recent increases in research spending should lead to more drugs in about 10 years, experts surmise.

Source: Andrew Pollack, "Despite Billions for Discoveries, Pipeline of Drugs Is Far from Full," New York Times, April 19, 2002.

 

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