Lessons from 60 years of pharmaceutical innovation

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Abstract
New molecular entities (NMEs) are produced at the same rate today as they were 50 years ago. The industry has averaged one NME per company every 6 years, and its most successful firms have averaged almost one NME per year. No firm has ever approached the two or three NMEs per year that many companies say they need to secure their future. Nothing that companies have done to increase NME output has worked, including mergers, acquisitions, reorganizations and process improvement. The industry output is not depressed, but reflects the limitations of its R&D model. Costs per NME have increased at a double-digit rate for decades, and are now well into several billions of dollars at many companies. The share of NMEs captured by large companies has declined and is now below that of small companies, despite the greater spending on R&D by large companies. The industry is caught in a vice between an NME output that is essentially constant, and likely to remain so, and the cost of producing it that is increasing exponentially. Overcoming these difficulties will require bold initiatives, such as open innovation, that may take companies far from their comfort zone
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