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R&D Return On Pharma Investment Picks Up

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Research and development (R&D) include activities that companies undertake to innovate and introduce new products and services. It is often the first stage in the development process. The goal is typically to take new products and services to market and add to the company’s bottom line.

In 2020, projected returns on investment in R&D for a combined cohort of 15 global pharmaceutical companies was 2.5 per cent, 0.9 percentage points higher than in 2019.

This is the first sign of a reversal in the declining trend seen over the past seven years, according to research by Deloitte’s Centre for Health Solutions.

The range in performance between the top performing and bottom performing companies has narrowed, however, with all but one company having an internal rate of return below the industry weighted average cost of capital.

In 2020, the cohort saw an increase in average forecast peak sales per pipeline asset to $421 million, from $357 million in 2019. However, the average cost to develop an asset increased once more to $2,442 million, up $51 million compared to 2019 and a $1,115 million increase since 2013.

The increase in costs per asset is due mainly to a fall in the overall number of assets in late stage pipelines which decreased from 213 in 2019 to 207 in 2020. Between 1 May 2019 and 30 April 2020, the cohort had a total of 53 assets approved, an increase from 39 in 2019.

Deloitte also commissioned analysis measuring the impact of the COVID-19 pandemic on clinical trials to investigate the likely impact on future year returns.

The analysis revealed that between March and November 2020, the pandemic affected an estimated 1,210 trials across the industry. The vast majority of these had delayed starts or completions; and eight per cent were terminated or withdrawn.

Colin Terry, Consulting Partner for European R&D at Deloitte, commented: “We are finally seeing seeds of change in the projected R&D productivity given recent progress of some novel trial designs and improvements in efficiency through the digitalisation of drug discovery and development.

However, adoption continues to be experimental and not at scale across the industry, although accelerated by the COVID-19 pandemic across all stakeholders and regulators.

The ‘need for speed’ has become all-encompassing alongside the realisation that development cycle times need to be reduced and new ways of working embraced to finally see the industry break the trends of the last decade.”

What Will The Life Sciences and Healthcare Sectors Look Like in 2025?

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As 2020 draws to a close, Deloitte in the United Kingdom has unveiled some predictions on how patients, healthcare and life science companies and their staff might behave and operate in five years’ time, based on today’s evidence.

Below is a list of sector predictions for the year 2025:

  • Advances in AI-enabled robotics, cognitive automation, digitalisation and life-long learning will help task shifting and role-enrichment, changing the who, what, and where of work.
  • Advanced AI-enabled technologies will also have accelerated drug discovery and clinical trials improving efficiency and efficacy and reducing costs, enabling companies to reverse the decline in the returns from pharma R&D.
  • Predictive prevention models will have led to more precise public health digital interventions – dramatically lowering smoking rates, improving nutrition and reducing loneliness.

Karen Taylor, director, United Kingdom Centre for Health Solutions, said: “This year, inevitably, our predictions have been informed by the unparalleled impact of COVID-19 and how people perceive health risks.

“In response to the pandemic, the pharma industry, academia, biotech and governments initiated scientific ventures funded by governments, multilateral agencies, not-for-profit institutions and the private sector.

The sharing of data has expedited the search for new treatments and vaccines, with regulators quickly entering into discussion aimed at supporting the most promising innovations.”

Deloitte United Kingdom Overview

Deloitte United Kingdom is a leading professional services firm – one of the largest in the United Kingdom and part of a global network spanning 150 countries and territories.

We’re made up of 20,000 professionals, with a wide range of specialist skills, who our clients rely on to help them with programmes and projects that are critical to their success.

Whether it’s digital transformation expertise, sustainability know how, cyber skills or financial advice, we help clients in the public, private and third sectors meet challenges big and small.

Baker McKenzie grows Life Sciences practice in New York

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The co-chairman of Morgan, Lewis & Bockius’ life sciences practice, Randall Sunberg, and partner Denis Segota are moving to Baker McKenzie in the Big Apple.

Sunberg and Segota will join Baker McKenzie as partners in its health care industry group and its North America corporate and securities practice, the firm announced Tuesday. Though they are officially members of the firm’s New York office, they will operate out of the life sciences corridor in Princeton, New Jersey.

“The international platform is just unbeatable [at Baker McKenzie],” said Sunberg, who will now serve as co-head of the firm’s North America life sciences practice.

Sunberg joined Morgan Lewis in 1999 from Shook, Hardy & Bacon and has worked with clients on M&A and private financing transactions for more than 35 years.

He works with life sciences clients from biotech startups to multinational pharmaceutical and medical device companies on complex collaborations, joint ventures and licensing transactions, as well as equity investments and alternative financing arrangements. He also works with clients on contractual arrangements for drug discovery, development and manufacturing.

It was the focus on health care and life sciences worldwide that drove the pair to make the jump to Baker McKenzie, Sunberg said. From the number of cross-border transactions to the firm’s role in M&A and emerging markets across the globe, Baker McKenzie offered “a compelling story for us and for our ability to serve our clients on an even larger platform,” he added.

And Baker McKenzie’s presence in these emerging markets provides a strategic advantage for some of the pair’s clients looking to access services in those locations.

“Our pharmaceutical clients are focusing on growth and they’re looking at emerging markets for [that] growth,” said Segota, who spent nearly 20 years at Morgan Lewis advising companies in the pharmaceutical and biotech sectors on joint ventures, strategic alliances, licensing and other arrangements promoting the research and development of new products.

Segota advises clients on M&A and private financing transactions, working with both financial institutions and companies in royalty monetizations, venture capital and other private equity financings.

“Randy and Denis are trusted advisers to companies across the life sciences sector, from biotech startups to global pharmaceutical companies,” Alan Zoccolillo, chairman of Baker McKenzie’s North America health care industry group, said in a statement.

“As health care companies look to grow in a hypercompetitive environment, they need pragmatic, business-focused solutions. Randy and Denis bring deep industry and technical knowledge that will immediately benefit our team and our clients.”

Sunberg said there is a lot of client overlap already between the firm and his and Segota’s practice, but the pair will now bring the licensing and collaboration expertise to representations on a more global scale.

“We are really looking forward to working with the rest of the health care team at Baker McKenzie to build [the practice] and make it even stronger and have a really purposeful approach toward adding elements where we think we need additional expertise to better serve our clients on their worldwide transactions,” he added.

The pair worked with Sabina Lippman and Vijay Luthra of global legal recruitment firm Lippman Jungers in their move.

The addition of Sunberg and Segota is one of the first major hires stateside for Baker McKenzie, which earlier this year added White & Case M&A attorney Peter Lu as a partner and head of the firm’s China group in London. The firm also added consultants Casey Flaherty and Jae Um as director of legal project management and director of pricing strategy, respectively, as the firm looks to re-engineer the delivery of its services.

BDO expands product development Advisory Services in Life Sciences

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BDO USA, LLP, one of the nation’s leading professional services organisations, today announced the acquisition of BioProcess Technology Consultants, Inc. (BPTC), a provider of chemistry, manufacturing and controls (CMC) consulting services to the global biopharmaceutical industry. The acquisition of BPTC bolsters BDO’s capabilities in the life sciences industry within the biopharmaceutical product development space and is effective as of April 1, 2019.

“We are pleased to welcome BPTC’s knowledge and resources to enhance our focus in the life sciences industry and deepen our biopharmaceutical product development offerings,” said Eric Jia-Sobota, national leader of BDO’s Industry Specialty Services and Life Sciences practices. “Joining forces with BPTC strengthens our ability to assist life sciences companies in managing risk, maximising profitability and fostering continued innovation to unlock new value and deliver improved outcomes.”

Founded in 1994, BPTC was a biologics CMC consulting firm, providing a full range of technical, regulatory and strategic assistance related to the development and commercialisation of biopharmaceutical products. BPTC assisted clients in developing manufacturing processes and strategies that enhanced the overall value of their products, while de-risking product development.

Howard L. Levine, Ph.D., BPTC founder, president and CEO will become managing director and national leader of the Bioprocess Technology Group within BDO’s Life Sciences practice.

“Since our inception, we’ve worked with companies to advance and de-risk the biotherapeutic development process, address unmet medical needs and increase patient access to novel medicines,” said Levine. “We’re excited to join BDO’s Life Sciences practice to support clients across the entire product development and company lifecycles.”

The professionals of BPTC who have joined BDO’s Life Sciences practice are headquartered in BDO’s Boston office at One International Place and based in locations throughout the country.

BDO Facts:

  • Over the past six years, BDO USA’s cumulative growth rate has far outpaced all other major U.S. accounting firms, with revenues more than doubling from $618 million in 2012 to $1.47 billion in 2018. During that time, BDO entered 24 new U.S. cities and expanded its critical mass in 13 existing markets.
  • BDO represents companies ranging from closely-held private businesses to leading non-profits to Fortune 500 multinationals.
  • BDO USA has industry practices specialised in serving businesses in the construction, energy, financial institutions, asset management, government contracting, healthcare, insurance, life sciences, manufacturing, non-profit, private equity, real estate, restaurant, retail and technology sectors.
  • BDO has been named a Best Company by Working Mother Magazine for eight consecutive years and been recognised with the When Work Works Award for Business Excellence in Workplace Flexibility for nine consecutive years.
  • BDO has more than 60 offices and over 650 independent alliance firm locations around the country.
  • BDO USA has been serving clients for more than 100 years since its founding in 1910 (as Seidman & Seidman).
  • As an independent member of BDO International Limited, the firm can leverage the resources of more than 80,000 people in 1,591 offices across 162 countries.

Firm Overview

BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, and advisory services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 650 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of more than 80,000 people working out of 1,591 offices across 162 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. For more information please visit https://www.bdo.com/