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Is the Pharma industry lacking innovation?

Economic 101, supply and demand is one of the fundamental concepts of a market economy. Unfortunately, according to an article by Kelvin Stott, the pharmaceutical industry business model does not necessarily fit into this.  The pharmaceutical process for developing new products takes years, it is estimated that the full lifecycle of research, development, approval and sales takes up to 20 years. In addition, the pharma industry relies heavily on R&D investments (research and development). The IRR (internal rate of return) is in the decline and the cost of clinical trial costs and timelines are only increasing. Stott’s 2017 article, indicates that in theory the IRR is negative 100% and the average investment period is 13 years.

The pharma industry relies heavily on R&D investments (research and development) and not all products make it to the market. According to Standish Fleming’s article, there’s a 97-plus% failure rate and the solution is innovation and entrepreneurial partnership. He stated that a new business model and a smaller industry can be more efficient and may provide long-term industry prospects.

Can the pharmaceutical industry evolve? Or, will it be forced to seek partnerships for survival.

 

 

 

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