The evaluation of system-wide financial incentives in pipeline decisions in the pharmaceutical and biotechnology industry : the paradox of R&D spend Vs. new drug approvals
Name
808382883-MIT.pdf
Description
Full printable version
Size
21.61 MB
Format
Adobe PDF
Checksum (MD5)
9f39f9bf7dce3f461a52ceb9c94b23aa
Author(s)
Swarna, Kailash, 1963-
Advisor(s)
Andrew Lo and John Van Maanen.
Date Issued
2012
Publisher
Massachusetts Institute of Technology
Abstract
For several decades, the ascendancy of the Pharma & Biotech sector was largely driven by favorable macro-economic conditions combined with an astonishing level of innovation and a clear focus on addressing unmet medical needs. Significant R&D investments led to innovative drugs that changed clinical practice across multiple illnesses and contributed to an overall rise in life expectancy around the world. Unfortunately, this trend has not continued. Since the mid-90s', the approval of novel drugs has plummeted despite record levels of R&D investment. It is estimated that between 2000 and 2010, the top 10 global Pharma and Biotech companies have collectively invested over $500 Billion in R&D. In the same period, only about 150 novel drugs entered the market. This is partly explained by the fact that quick-wins have been harvested, and that further progress in treating grievous illness is harder to achieve. This is compounded by increasing concerns about the longterm safety of drugs and the conservative regulatory climate that has prevailed since 2000. In this challenging regulatory and cost environment, the basic economic model of the industry is now being questioned. In this work I review the recent financial performance of ten major global pharmaceutical companies, and the challenges faced by the industry in moving from a deterministic, blockbuster era to a more stochastic era defined by multiple unknowns.
Description
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management, 2012.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 98-102).
Subjects
Sloan School of Management.
MIT Department
Sloan School of Management
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