Minimizing development time is challenging yet critical to maximizing asset value. The faster you develop your molecule, the better positioned you are to realize the full value of your asset with longer market exclusivity for you or your co-development partner. How to accomplish this most effectively may surprise you. The answer lies in adopting the right drug development model.
Through considered economic analysis, the value of a programmatic model over a transactional approach is made tangible, revealing the saving power, which can result in millions of dollars, that impacts both your asset and company financial performance.
Value can be interpreted in different ways depending on your company's strategy or program objectives. It can be based on individual asset or company net present value (NPV), revenue, company viability or liquidity. It can also be realized in different ways, such as cost savings or efficiency.
In an attempt to capture more value, a significant proportion of early drug development work has migrated from large pharmaceutical to smaller biotech organizations in the last 10 to 15 years. Because the cost of drug development continues to increase ($2.6 billion)1 without substantial gains in number of products approved or time to market, many large pharmaceutical companies are focusing in-house resources on later stage development and commercialization. Through licensing and acquisitions, large pharma is utilizing the innovation and efficiency power of smaller biotechs to feed their pipelines. Biotech companies, therefore, hold a key role within the pharmaceutical sector as an innovation engine.2, 3
To be nimble, improve efficiency and reduce fixed costs (facilities and staffing), smaller companies are outsourcing drug development work to various contract research organizations (CROs), leveraging their expertise and resources.4, 5, 6 With this outsource strategy, it is estimated that 80% of companies are pursuing drug development as a series of independent transactions, utilizing several external vendors.7
While this transactional approach offers some benefits (access to expertise, reduced fixed costs, etc.), it does not fully enable the greater opportunity to integrate a drug development program to save time and maximize asset value.
A newer, alternative strategy for drug developers is to adopt a programmatic model. Today it is estimated that already 20% of the pharmaceutical industry has moved to a programmatic approach in which a single partner or CRO prospectively plans, and then optimally performs, a set of pre-defined studies and services to support the development of a molecule. The result is increased flexibility, efficiency and enhanced insight – saving valuable time and maximizing asset value more expeditiously. The early adopters of the programmatic model have realized up to 30% improvement in time savings on their program.7
In this case scenario, the concept of the ‘time value of money’ is transformed into a tangible value estimation that can be adjusted to facilitate outsourcing model comparisons.
Four key considerations are explored for comparing transactional and programmatic models and make economic conclusions: