Big Phar­ma’s busi­ness mod­el is bro­ken; New drug OKs plunged this year, high­light­ing an ug­ly re­al­i­ty

End­points as­sess­es the big bio­phar­ma R&D sto­ries of the week, with a lit­tle added com­men­tary on what they mean for the in­dus­try.

  Big Phar­ma’s busi­ness mod­el is bro­ken, so change it

When your ac­coun­tant tells you the busi­ness you’re run­ning is un­sus­tain­able, it’s a good idea to pay very, very close at­ten­tion to the de­tails. So it is with Big Phar­ma and drug de­vel­op­ment, a game which the largest play­ers in the in­dus­try have not mas­tered. De­loitte reck­ons that an al­ready bad ROI just got worse for the top 12 phar­ma com­pa­nies, and there are no signs that the num­bers are go­ing to get any bet­ter. So maybe it’s time that these big out­fits re­think how they’re run­ning R&D. What are they good at? Why in­vest heav­i­ly in ear­ly-stage re­search? Are they bet­ter at de­vel­op­ment? Aside from a few rare ex­cep­tions, there’s lit­tle ev­i­dence that any­one in this league has thought through the long-term con­se­quences of a lack of pro­duc­tiv­i­ty. It’s time to start, and come up with some­thing bold and new. The old busi­ness mod­el, where you con­tin­u­al­ly hike the price of ag­ing ther­a­peu­tics, won’t cut it go­ing for­ward.

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