Figure 2: R&D model yielding costs to successfully discover and develop a single new molecular entity. | Nature Reviews Drug Discovery

Figure 2: R&D model yielding costs to successfully discover and develop a single new molecular entity.

From: How to improve R&D productivity: the pharmaceutical industry's grand challenge

Figure 2

The model defines the distinct phases of drug discovery and development from the initial stage of target-to-hit to the final stage, launch. The model is based on a set of industry-appropriate R&D assumptions (industry benchmarks and data from Eli Lilly and Company) defining the performance of the R&D process at each stage of development (see Supplementary information S2 (box) for details). R&D parameters include: the probability of successful transition from one stage to the next (p(TS)), the phase cost for each project, the cycle time required to progress through each stage of development and the cost of capital, reflecting the returns required by shareholders to use their money during the lengthy R&D process. With these inputs (darker shaded boxes), the model calculates the number of assets (work in process, WIP) needed in each stage of development to achieve one new molecular entity (NME) launch. Based on the assumptions for success rate, cycle time and cost, the model further calculates the 'out of pocket' cost per phase as well as the total cost to achieve one NME launch per year (US$873 million). Lighter shaded boxes show calculated values based on assumed inputs. Capitalizing the cost, to account for the cost of capital during this period of over 13 years, yields a 'capitalized' cost of $1,778 million per NME launch. It is important to note that this model does not include investments for exploratory discovery research, post-launch expenses or overheads (that is, salaries for employees not engaged in R&D activities but necessary to support the organization).

Back to article page