Pharmaceutical industry examines new drug development methods

Improvements to management decisions by pharmaceutical companies at the Phase II to Phase III clinical development point would save considerable R&D resources, according to a new study from management consultant firm McKinsey & Co. The report was authored by Maria Gordian, a McKinsey principal, Navjot Singh, an associate principal, and Rodney Zemmel, a director of the company's New York office.

Despite the fact the final stage of clinical testing is designed to confirm the efficacy and safety of new drugs under development, the McKinsey research found that the failure rate at Phase III could be as high as 40%. "To reduce the high number of late failures, pharmaceutical companies should re-examine their approach to the development of drugs and begin differentiating those in their pipelines by risk," the authors conclude.

A high level of development discontinuation at such a late state is all the more expensive since Phase III trials are both more expensive and more closely scrutinized by investors than the earlier stages of testing. This factor may, some analysts argue, be connected with the inability of drug firm managements to terminate trials in Phase II. To cancel a borderline drug at Phase II can be considered a "courageous" decision, which in some corporate environments could be risky for the executive concerned.