Looking at the biotech and pharmaceutical pipeline, I can’t help but notice the innovation “bulge.” When drug companies were flush with cash in the 1990’s, they invested heavily in R&D.
That bulge of innovation is now reaching Phase II. In fact, Phase I and Phase II pipelines are up 46% in the last several years with over 1,000 compounds in Phase I and another 1,200 in Phase II. Most of this innovation shifts towards the specialty markets, biotech and oncology.
As this innovation bulge moves through the pipeline, I see a couple of trends emerging. The first is that attrition rates are rapidly increasing. The second is that pharmas are less willing to begin groundwork for Phase III and submission (i.e., less “at risk” efforts). The third is that companies have invested heavily in new technologies (genomics, proteomics, etc.) in the 1990s and those technologies have not paid off (and won’t pay off in the regulatory submissions until after this decade). It’s a long slow adoption curve.
I keep reading about the innovation draught. And, to be sure, some companies are really hurting. However, there’s more coming than meets the eye.
