R&D Spending & Success: Key Trends, Issues & Solutions


Debates about rising bio/pharmaceutical prices are often predicated on the presumption that higher product prices are necessary for continuing funding of innovation. Recent trends only partially bear this out. While total spending on bio/pharmaceutical R&D has largely remained constant, costs for clinical trials have consumed a rising proportion of R&D budgets. More spending on clinical trials, however, has not yielded higher trial success rates.


Prior to product launch, clinical trials take up most of the financial resources attributed to a product in development, costing on average $75-$100M. While completing a full cycle of pre-clinical and clinical trials can take an average of 7.5 years, the probability of successful filing for marketing a drug after clinical trial testing has never exceeded 13-20%, despite advances in trial design and testing processes.

This article discusses key trends in R&D spending and productivity. It then lays out issues that prevent clinical trials from achieving higher success, and presents operational and strategic solutions that can be implemented to improve the effectiveness of increases in R&D spending.

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