Note: The following focuses on New Medical Entities (NME’s.) These are defined as the novel, initial member of a chemical family for a drug. The data is derived from the public FDA database on approved drugs for past years. From that, the count of simple variations on the initial innovation are subtracted. These may include dosage forms, salts, and simple modifications to the core structure (e.g., “adding a methyl group” that does not dramaticaly improve efficacy/safety.) Many other industry analyses focus on the approval of the larger pool of “New Molecular Entities”, which we will call “nme’s” on this site to differentiate from the innovator. The first to market innovator “should” reap significant benefits from society (price, and market share) over those that follow-on. This is not always true.
Most of my focus is on how individual firms are applying new tools and techniques to improve returns on their R&D investments and assets. Part of that is looking also at potential confounders like merger effects (most of the charts and initial comments below on this page.) A surprising recent insight came from the aggregate of this data here, showing a reversal of innovation (and hopefully productivity and profits) for the overall industry.
NME’s vs. Mergers:
The images below are part of a study I am reprising from work I did ten years ago. Results below reflect in-progress work and should not be seen as final. However recent dialogs on the web resuted in viewers asking to see these, so take them with a grain of salt. The formal analysis will come later and address impact of other drivers of R&D performance including six-sigma adoption and other techniques and technologies. But intial patterns are interesting: (Please add your comments below!)
Initial observations: Some mergers appear at the start of a long dropoff of NME productivity, some do NOT. Reasons are probably unique to each combination and to the reasons for merger. Note also the overall decline of NME/year for all, and that the best performers seem to be converging on ~ 0.5 NME/year – regardless of size of spend. For those that like confusing patterns, here is the overal cohort overlaid:
NOTE: The NME (New Medical Entity) numbers are smoothed, but come from the FDA’s Orange Book database. I have filtered that, using some of their own metadata but culling for truly novel NME’s is a bit more subjective. Hopefully by applying uniform rules for that culling, the patterns become useful.