Despite unprecedented investment in pharmaceutical research and development (R&D), the number of new drugs approved by the US Food and Drug Administration (FDA) remains low. To help understand this conundrum, this article investigates the record of pharmaceutical innovation by analysing data on the companies that introduced the ∼1,200 new drugs that have been approved by the FDA since 1950. This analysis shows that the new-drug output from pharmaceutical companies in this period has essentially been constant, and remains so despite the attempts to increase it. This suggests that, contrary to common perception, the new-drug output is not depressed, but may simply reflect the limitations of the current R&D model. The implications of these findings and options to achieve sustainability for the pharmaceutical industry are discussed.
New molecular entities (NMEs) are produced at the same rate today as they were 50 years ago.
The industry has averaged one NME per company every 6 years, and its most successful firms have averaged almost one NME per year. No firm has ever approached the two or three NMEs per year that many companies say they need to secure their future.
Nothing that companies have done to increase NME output has worked, including mergers, acquisitions, reorganizations and process improvement.
The industry output is not depressed, but reflects the limitations of its R&D model.
Costs per NME have increased at a double-digit rate for decades, and are now well into several billions of dollars at many companies.
The share of NMEs captured by large companies has declined and is now below that of small companies, despite the greater spending on R&D by large companies.
The industry is caught in a vice between an NME output that is essentially constant, and likely to remain so, and the cost of producing it that is increasing exponentially.
Overcoming these difficulties will require bold initiatives, such as open innovation, that may take companies far from their comfort zone
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I thank the late Armen Tashjian (Harvard School of Public Health and Harvard Medical School) for his unrelenting support, and M. Munos (Johns Hopkins School of Public Health) for her extensive feedback on previous versions of the manuscript.
- New molecular entity
(NME). A medication containing an active ingredient that has not been previously approved for marketing in any form in the United States. NME is conventionally used to refer only to small-molecule drugs, but in this article the term includes biologics as a shorthand for both types of new drug.
- Prescription Drug User Fee Act
A US law passed in 1992 that allows the US Food and Drug Administration to collect fees from drug manufacturers to fund the new-drug approval process.
- Orphan drug
A drug that is specifically developed for a disease that affects a patient population of fewer than 200,000 people in the United States. The Orphan Drug Act provides financial incentives to develop such drugs, including marketing exclusivity for that indication for 7 years after approval.
- Open-source R&D
A broad-based participatory research model in which a virtual network of volunteers use online tools to address a problem in which they share an interest.
- Disruptive innovation
A process to turn cutting-edge science into novel products with such superior features that they create vast new markets, which unsettles established products and technology.
- Black swan
A metaphor that designates rare random events of key importance that reshape markets, industries and societies.
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