You’ve Got to Spend Money to Make Money
• Companies can spend upwards of $5 billion per new
• Most of the expenses come from failed drugs,
which account for 95% of drugs that enter the clinic.
• Fortunately, with decent sales, approved drugs can
produce many times the average development cost
over the life of the patents.
• Unfortunately, spending money on R&D doesn’t
• Revenue and R&D expenses peaked in 2011.
• Company has decreased R&D expenses even more
than revenue to compensate
• Unclear how that’ll affect long-term pipeline
• Revenue has dropped with the loss of exclusivity
on Seroquel IR, Atacand, Nexium, and Merrem in
various parts of the world.
• R&D decreased a little, but skyrocketed as a
percent of revenue.
• Company has 11 new molecular entities in Phase 3
or in front of regulators, almost double the
• A few years ago, Roche bought Genentech,
arguably the powerhouse of biotech R&D
• Revenue was up substantially in 2013. In a world
of patent cliffs, can you really ask for more?
• Loss of exclusivity on Plavix hurt revenue.
• Solid pipeline has encouraged Bristol-Myers to
continue to spend. (Six drugs in Phase 3, nine in
phase 2, and 14 marketed products being tested in
• Continued spending substantially increased R&D
as a percent of revenue.
• Revenue decline due to loss of exclusivity on
• Spending on R&D has continued to increase.
• The combination resulted in a substantial increase
in R&D spending as a percent of revenue, leading
the pharmaceutical pack.