Estimate the Impact of Time Savings on your Drug Development Program, Asset Value and Financial Company Performance

An Economic Comparison of Programmatic and Transactional Development Models

Executive Summary

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.

Peter Sausen, PhD
Vice President, Early Phase Development Solutions
Bill Hanlon, PhD
Chief Development Officer and Head of Global Regulatory Affairs


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

up to 0% improvement in time savings

A programmatic approach leverages program management principles and prospective planning to enable:

  • Reduction or elimination of “white space” or time gaps between studies and development phases
  • Preservation of critical molecule knowledge for easy transfer between different expert disciplines and across the phases of development
  • Parallel conduct of studies to streamline the critical path of development
  • Maximized efficiencies and removal of process, communication and other operational duplication
  • Additional time/value benefits

Case Scenario:
Programmatic Model

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:

  • Flexibility: Determine what to outsource to align to your strategic objectives, meet key milestones and optimally save time.
  • Cost: Compare development models side by side to understand total cost differences – including both direct and indirect costs.
  • Time: Estimate how enhanced planning, communication and insights translate into time savings.
  • Value: Understand the impact of time savings on commercial launch timing, patent exclusivity and company/asset value for partnering discussions or financing evaluation.
View PDF


  1. DiMasi, Tufts Center for the Study of Drug Development, March 2016.
  2. Are M&A Replacing R&D In Pharma? Forbes, April 2015.
  3. Experts advise Big Pharma to Shift to In-Licensing, FierceBiotech, February 2010.
  4. How can pharmaceutical and life sciences companies strategically engage global outsourcing? Price-Waterhouse Coopers, 2015.
  5. Getz, Wenger. High Times for the CRO Heavyweights. Scrip Supplements, March 2007.
  6. Getz, Lamberti, Mathias. Resizing the Global Contract R&D Services Market. Contract Pharma, May 2012.
  7. Assumptions and calculations of transactional vs. programmatic outsourcing models, based on real world experience supporting drug development programs for more than 600 biotech clients each year, more than 300 IND/CTA-enabling programs and more than 100 FIH trials executed in past 5 years, as well as experience leading Early Phase Development Solutions programs, global clinical trials, regulatory submissions and market access research and commercial stakeholder insight. Covance, Inc.
  8. Primary Market Research: “The Economic and Value Drivers of Drug Development Impacting the Cost and Time Factors of a Program,” April 2017, third party research study sponsored by Covance, Inc.
  9. Based on Covance Economic Valuator simulation of small molecule, critical-path analysis. Covance, Inc.