Deals Crucial to Offsetting $2.5 Billion Cost of Developing a Novel Drug, says Report

With the average cost of getting a novel drug to market at almost $2.5 billion, and few products achieving blockbuster status, deal-making is becoming increasingly vital for pharmaceutical companies to offset rising R&D costs, says GBI Research.

The company’s latest report states that pharma companies are considering various strategies to overcome the current challenges, which also include shifts in patent laws and the struggling global economy, with deal-making the foremost method of boosting short-term revenues.

GBI analyst Priyatham Salimadugu says deal activity can help pharma firms to enhance their research and regulatory approaches, and can aid portfolio expansion and diversification, geographic expansion, entry into niche markets, commercialization, and sales. He adds that the shift from small molecules to large molecules, such as antibodies and proteins, has created new opportunities in the pharmaceutical industry, leading to increasing deal numbers.

The report also states that overall pharmaceutical deal values remained between $110 billion and $160 billion from 2010 to 2014, but will rise markedly this year, with a total value of $261 billion already amassed by the end of July 2015, and further increased by more recent deals.

Salimadugu comments: “Partnerships were the most popular type of deal between January 2014 and July 2015, followed by licensing deals and acquisitions. Though acquisitions were fewer, the disclosed deal value for this category was the highest.”

*Pharmaceutical Deal Trends (2010–2015) and In-Depth Analysis of Recent Deal Activity