Innovation in the Pharmaceutical Industry: The Process of Drug Discovery and Development - Innovation and Marketing in the Pharmaceutical Industry - page 21

The fundamental role of the pharmaceutical industry in maintaining and enhancing
human life is further refl ected in the magnitude of its R&D activity. By some
accounts, pharmaceutical R&D holds an impressive 19 % share of all business
spending on R&D worldwide—an impressive fi nancial commitment for a single
industry. The USA is accountable for the lion's share of pharmaceutical innovation
as it fi nances about 36 % of the global expenses in pharmaceutical R&D.
In 2010, the US-based pharmaceutical fi rms had a total budget of about $67 billion
designated for research. Another $31 billion was earmarked by the National
Institutes of Health (NIH) to fund research in public sector institutions (primarily
government labs and universities). 1 The total pharmaceutical R&D spending in the
USA has been steadily rising at an average rate of about 12 % a year, not adjusting
for infl ation (Cockburn 2007 ).
PhRMA members allocate about 20 % of their domestic sales to R&D, which
makes the pharmaceutical industry the most research-intensive one in the USA. The
industry's R&D spending per employee is estimated at $105,430, which is 40 %
higher than the second highest research-intensive industry (communications equip-
ment), and 60 % higher than other technology-driven industries such as semicon-
ductors, computers, and electronics.
PhRMA companies currently boast rich pipelines of drug candidates. In the USA
there are nearly 3,000 different medicines in various stages of product development,
representing a whopping 45 % of all drugs in development worldwide. Of those
3,000 new drugs in the pipeline of the US-based fi rms, an assortment of anticancer
drugs holds the lead with 861 medicines in development, followed by 334 for respi-
ratory diseases, 300 for rare diseases, 299 for cardiovascular disorders, 252 for men-
tal and behavioral disorders, 235 for diabetes, 100 for HIV/AIDS, 98 for Alzheimer's
disease and dementia, 74 for arthritis, and 25 for Parkinson's disease. 2
Despite the ubiquitous presence of medications in our lives, to many of us
laypersons, the actual drug innovation process seems arcane. As customers or
patients, we tend to focus on the end outcomes, just like we do with other high-tech,
increasingly complex and specialized fi elds of innovation. And yet, as human
beings, we are often fascinated by the possibilities the latest advances in life sciences
(e.g., genomics, molecular biology, neuroscience, biotechnology) open to us. Drug
innovation converts these new opportunities into drugs that can directly impact our
physiology. This realization prompts a closer examination of the methods, steps,
and processes associated with the genesis of ethical drugs.
1 The National Institutes of Health (NIH), part of the U.S. Department of Health and Human
Services, is the nation's leading medical research agency. It is also the largest source of funding for
medical research in the world. More than 80 % of the NIH's funding is awarded through about
50,000 competitive grants to more than 325,000 researchers at over 3,000 universities, medical
schools, and other research institutions across the USA ( Source : NIH website, www.nih.gov ) .
2 It is hardly surprising that the innovation pipeline of the US pharmaceutical fi rms is primarily
composed of drugs corresponding to the therapeutic categories with the largest sales in the USA:
oncologics ($22.3 billion), respiratory agents ($19.3 billion), lipid regulators ($18.8 billion), anti-
diabetes ($16.9 billion), and antipsychotics ($16.1 billion). Sources : IMS Institute for Healthcare
Informatics, Adis R&D Insight Database, PhRMA Pharmaceutical Industry Profi le 2011.