Is Drug Innovation The Key To Leading-Edge Growth?

In an attempt to explain the competitive environment that is the sombre backdrop to the global pharmaceutical industry today, Frank Douglas, executive vice president and head of global research at Hoechst Marion Roussel, said that innovation must lead to growth, that is, growth in financial terms.

Speaking at the third pharmaceuticals conference organized by The Economist in London, UK, Mr Douglas talked of productivity in terms of required financial return. He said that the number of $400 million New Chemical Entities required for a 10% pretax return on R&D investment is 1.3-1.7, while 3.6-4.0 NCEs would bring in a 20% return.

He pointed out, as did other speakers at the conference (see page 3), that during the 1980s through to 1996 there had been an almost doubling every five years of R&D spend, but output, in terms of New Drug Applications approved, is decreasing. For Mr Douglas, quantity of output is not the real issue, but quality of output is.