The return on investment (ROI) for R&D is falling, say Deloitte analysts in their sixth annual report on the pharmaceutical industry's R&D performance. The analysis, based on data from a cohort of 12 life sciences companies, shows that the R&D ROI for these companies was down to 4.2% in 2015, from 10.1% in 2010 (see Fig. 1).

Figure 1
figure 1

Industry R&D return on investment (ROI), as calculated in Deloitte's “Measuring the return from pharmaceutical innovation 2015”.

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“Since 2010, the decline in the forecast peak sales of assets has had the greatest, negative impact on R&D returns,” the authors write. They report that the average peak sales forecasts per asset has approximately halved, from US$816 million in 2010 to $416 million in 2015. “This reduction has been caused by multiple, distinct pressures from reimbursement, competition and smaller patient volumes,” they write. An analysis of peak sales forecasts has shown, however, that these forecasts can be wildly inaccurate (Nat. Rev. Drug Discov. 12, 737–738; 2013).

The Deloitte report also found that between 2010 and 2015 the average cost of developing an asset increased by around one-third, from $1.188 billion to $1.575 billion. A smaller 'extension' cohort of four mid- to large-cap companies fared considerably better on drug development costs, with an average development cost of $1.08 billion per asset. This extension cohort also outperformed the original 12 companies on every measure of R&D performance. “We believe this shows the economic viability of a different R&D business model which our original cohort could learn from,” the Deloitte analysts write.