Pharma R&D internal rate of return falls for a second year but shows signs of stabilizing

The R&D internal rate of return (IRR) of leading pharmaceutical companies has fallen for a second successive year to 7.2% in 2012 from 7.7% in 2011. This is according to the findings of the latest review of pharmaceutical R&D returns performance by Deloitte, the business advisory firm, and Thomson Reuters. However, indications are the decline is beginning to stabilise as these companies have improved the upstream movement of compounds into the late stage pipeline.

Measuring the return from pharmaceutical innovation 2012, the annual study of the top 12 research-based pharmaceutical companies globally, reveals the number of product approvals increased by a third between 2010-11 and 2011-12. Conversely, the 32 approvals in 2010-11 accounted for forecast revenues of $309 billion, the 41 in 2011-12 just $211 billion.

Number of new compounds entering the late stage pipeline, and their value, doubled