This month we highlight a paper published earlier this year in Drug Discovery Today. The article, “Does R&D Pay?” looks at the effectiveness of different R&D strategies. This is achieved by looking at 10 year historical financial performance of different types of drug firms (big pharma, specialty/ generic, and biotech).
And it leads to some interesting conclusions about where investors might get the best return…
Here’s the article abstract:
Pharmaceutical R&D is notoriously risky, lengthy and costly; moreover, it does not always produce products of blockbuster status. The conventional route of fully discovering, developing and marketing a new chemical entity is followed by the large pharmaceutical companies, whereas other organizations in the pharmaceutical sector – such as generic or specialty companies and biotechnology companies – only operate over portions of the full R&D process. Here, we compare the ten-year financial performance of these three subsectors through their price/earnings ratios and their return on capital metrics to understand which of these strategic alternatives offered the best return to investors.
The paper was written by David Cavalla, Principal at ATPBio and Director of Numedicus; and Raman Minhas, CEO of ATPBio. ATPBio is a consultancy supporting biotech funding through VC, big pharma investors and partnering.