What’s In The Pipeline?
September 1, 2011
Facing negative publicity and investor wariness, pharmaceutical companies need to communicate how investments in R&D will deliver meaningful future growth.
These are worrisome times for pharmaceutical companies and their investors. There are concerns about looming patent expirations for profitable drugs, a difficult regulatory environment and the possibility of price controls. To address those issues, drugmakers must refocus on research and development.
Nearly eight in 10 of the investors polled expect pharmaceutical firms to keep R&D spending at or below current levels.
But not R&D as usual, according to the institutional investors who responded to a recent survey conducted by FTI Consulting. Those investors see the need for R&D models to change to address current challenges, but there’s no consensus on what should be different. That gives companies an opportunity to use their research programs to set themselves apart.
Nearly eight in 10 of the investors polled expect pharmaceutical firms to keep R&D spending at or below current levels — but 70% would prefer that companies step up their search for new drugs. At the same time, investors are scrutinizing the return on investment of specific programs and comparing those results with what corporate capital might have returned if it had been put into nonpharmaceutical investments.