I recently discovered an interesting overview article called The financial ecosystem of pharmaceutical R&D. This white paper was created for the Netherlands government and offers insight into the drug development process and how it is financed. It addresses the following questions:
What do different players do within the drug development ecosystem?
- Academic institutions and public research groups (PRGs) / not-for-profit organizations are primarily involved in target selection, but may also play a role in later phases.
- Biotechnology companies and small/medium-sized biopharmaceutical companies are active in drug discovery, preclinical development, and early-stage clinical development.
- Medium/large-sized biopharmaceutical companies are active throughout the whole value chain, particularly in the late-stage clinical development.
What are typical archetypes of how different stakeholders interact in the drug development process?
The paper also lists 7 different archetypes for drug development.
Who finances drug development?
Approximately two-thirds of funding comes from private sector life sciences companies, with significant growth in private sector funding between 2011-2019.
A case study of non-profit and biopharma funding interaction is illustrated by the development of cystic fibrosis drugs.
How much does it cost to develop a drug?
It is expensive, with an estimated average of $2.4–$3.2bn per single approved drug including the cost of capital.
How responsive is R&D investment to drug revenues and/or market size?
The report also discusses the degree of responsiveness of drug development to expected revenue.
The full report can be read here.
