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Where are all the trillion dollar biotechs? — lada nuzhna

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Of the many trends people chase in biotech, the only one that proves sure and consistent is declining returns. Even after adjusting for inflation, the number of new drugs approved per $1 billion of R&D spending has halved approximately every nine years since 1950. Deloitte’s forecast R&D IRR for the top 20 pharmas fell below the industry’s cost of capital (~7-8%) between 2019 and 2022. In other words, while the industry remained profitable overall, the incremental economics of R&D investment were value-eroding rather than value-creating. So, while other industries have a reason to treat the current market downturn as transient, the business of developing medicine has a more fundamental problem to deal with - it is quite literally shrinking out of existence. Src: EvaluatePharma, IRR analysis Pharma would need multiple $20 billion-per-year outcomes to reverse this trend, yet only three in history - Humira, Keytruda, and Pfizer’s COVID vaccine - have ever reached that scale [1]. This lead

Where are all the trillion dollar biotechs? Where are all the trillion dollar biotechs? Of the many trends people chase in biotech, the only one that proves sure and consistent is declining returns. Even after adjusting for inflation, the number of new drugs approved per $1 billion of R&D spending has halved approximately every nine years since 1950. Deloitte's forecast R&D IRR for the top 20 pharmas fell below the industry's cost of capital (~7-8%) between 2019 and 2022. In other words, while the industry remained profitable overall, the incremental economics of R&D investment were value-erod

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