New Frontiers in Pharma R&D Investment

Executive Summary

Given their diminishing R&D productivity, pharma companies have externalized more R&D in order to increase the number of drug projects and thus the chances of getting a major new product onto the market. But by and large, this externalization has used fairly traditional models, like product licensing, and hasn't fundamentally improved R&D's economics. Instead, these investment programs must increase the number of drug assets to which a pharmaceutical company has access - but without increasing to the same degree the capital or resource investment required to access them. Thus, a growing number of companies have begun to pursue new investment ideas that recognize that much of the value comes from having preferential access to the information needed to decide whether to exercise rights to programs - rather than day-to-day operational responsibilities. This article provides a framework for deciding among innovative models, and in particular, how to apply multiple approaches across an entire portfolio.