Faster can be better - for the bottom line

According to Tufts, drug companies that develop and launch new products faster than their competitors perform consistently better across a range of dimension, earn higher revenues and have lower devel

By Editor on Sep 26, 2006

According to Tufts, drug companies that develop and launch new products faster than their competitors perform consistently better across a range of dimension, earn higher revenues and have lower development costs. The group says that drugs developed by faster companies between 2000 and 2005, each gained an average of $1.1 million in incremental prescription revenue and saved an average of $30 million in out-of-pocket development costs, compared to the slowest companies.

Tufts examined 104 approved drugs from 29 companies.

Speed demon companies the fastest drug developers are consistently implementing efficient R&D practices across their portfolios, says Ken Getz, senior research fellow at Tufts. These companies have far less development and regulatory variability, kill projects sooner and are better at setting resource priorities. In a word, being fast on one project is good, but being consistently fast across the portfolio of projects is substantially better.

Tufts reports that Bayer, AstraZeneca, Allergan, Boehringer Ingelheim and Merck are the fastest development companies for the period from 2000-2005. Each of these top five companies was able to shorten its development and regulatory cycles by as much as 17 months, compared to average performing drug developers, the group says.

Tufts reports that, as a group, the fastest third of companies reduced their median development speed by 20% (from 66.5 months from 1994-1999 to 53 months from 2000-2005) and held regulatory cycle times flat at approximately 13 months.

In each therapeutic area where they compete, speed demon companies beat the overall median cycle time more than 83% of the time, the group says. And in part, Tufts reports that is because the fastest companies terminate 56% of discontinued projects in Phase I clinical development versus 36% for the slowest companies.

Given the high direct cost of development and substantial opportunity cost for a day of delay in reaching the market, speed and efficiency are central strategic objectives, Getz says. This is especially important today with steadily rising R&D costs, lengthening development and regulatory approval times, ever more complex clinical trials and stubbornly low success rates of drugs moving through clinical development.

A one day speed advantage, the group says, typically saves $37,000 in out-of-pocket development costs and nets an additional $1.1 million in daily prescription revenue for an average performing drug.

And while there's no debating that's all well and good for the bottom line, are faster drugs better drugs for patients? Have all of the drug safety i's been dotted and t's been crossed? Does speed squelch innovation and breakthrough medical science? Would those killed projects have led to lifesaving medicines that may have been worth the wait and the investment?

Speed certainly equals money, but what might the hidden costs be?