The expected return on investment for late-stage drug candidates has fallen by more than 50% since 2010 for many of the biggest pharmaceutical companies.

The lowdown: Analysts at Deloitte and Thomson Reuters started tracking the expected return on investment (ROI) on late-stage pipeline candidates from a cohort of 12 large pharmaceutical companies 4 years ago, and the 2013 analysis makes for grim reading. Although the companies have advanced 167 products with a risk-adjusted value of US$819 billion into Phase III trials since 2010, the anticipated average ROI on late-stage candidates is now only 4.8%. The comparable ROI for late-stage candidates was 7.2% in 2012, 7.7% in 2011 and 10.5% in 2010.

The total size of the late-stage pipeline has remained steady since 2011, at around 200 compounds, but the cumulative projected value shrank from $1,369 billion to $913 billion during this time, a 33% drop. Peak sales estimates for each asset also fell by 43% from $816 million in 2010 to $466 million in 2013, the report shows, potentially due to austerity measures and difficulties in securing reimbursement from payers. Late-stage failures accounted for $243 billion of the lost value of the pipeline.

There were, however, wide variations in the ROI predictions for the different cohort members. The top performer looks forward to an ROI of 10.7% on its late-stage candidates, while the worst dreads an ROI of −5.7%. The cohort is made up of Amgen, AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Pfizer, Roche, Sanofi and Takeda, but the ROIs for specific companies were not disclosed.

“Life science R&D returns remain challenging, but there are signs that the leaders in the cohort are weathering the storm,” the authors conclude.