Specialist R&D Tax & Grant Funding Advisors

Innovation in the Pharma Industry 2019

Barrie Dowsett

Chief Executive Officer


Innovation has been integral to pharma since the beginning. It is based on creating, developing and testing medications, which are absolutely crucial to the continuation of our civilisation. However, the industry has seen a decline in R&D returns to 1.9%; this is the lowest level in nine years. The industry needs some serious solutions. Perhaps the most successful innovations come from thinking outside the box, especially considering the unpredictable nature of the field. We lay out some of the ways in which pharma is changing.

AI and Big Data – pharma’s new best friend

Though pharma has been slower on the uptake for Big Data than some other industries, 38% of industry experts believe it is going to be the biggest game-changer for pharma in 2019. Using Big Data to better inform decision making can impact pharma at all stages, from drug discovery to clinical trials to improvement once passing regulations. Big Data allows us to improve efficiency by using predictive data modelling, decreasing failure rates and increasing personalisation of medicine, adding value to products and improving the user experience.

Similarly, AI is looking to improve the efficiency and efficacy of drug development. Pharma is suffering at the moment due to the decline in the number of new drugs being approved and the incline in the costs associated. AI can help, by using computers to help in drug design, showing the projects most likely to work and minimising the risk of human interaction, especially important as regulations become more stringent. There has been a boom in Health-Tech start-ups, and many high-profile partnerships between these companies and Big Pharma, like Sanofi’s partnership with Berg. Where the industry was previously focused on Cybersecurity, following certain breaches in 2017, it seems there is a shift towards using AI and Big Data to improve chances of approval and the personalisation of drugs. IP Pragmatics estimates that AI in healthcare, especially in China, will reach the value of $6.6 billion by 2021.

M&A – a continuing trend?

2018 saw some very important mergers and acquisitions and it looks like this approach is here to stay. Though restructuring can slow down the development process, shrewd businesses may well take these risks considering the encroachment of tech companies in the sector and the growing costs and declining returns of R&D. Though there has been pushback against the merger between Bristol Myers Squibb and Celgene, similar interest in oncological companies has been seen in Eli Lilly’s bid for Loxo Oncology. There has been a trend towards partnering with drug companies targeting specific diseases, especially oncology and gene therapy. Credit Suisse have released the results of their biopharma investor survey and found that the companies most likely to be acquired are in these fields.

China – from strength to strength

China’s investment in drug design has been steadily increasing in the last few years. According to IQVIA, Chinese pharma may be worth up to $175 billion by 2022. Growing reform of the China Food and Drug Administration means an expected quicker turnaround for drug development. The government is spending more on health-care. Frank Jiang, the CEO of CStone Pharmaceuticals, sees biotech becoming a booming venture for Chinese companies. Pharma in 2019 may well be driven by Chinese innovation.

Personalised Drugs – meeting expectations

Patients are living better and longer and are thus looking for a more personalised approach to medication. As mentioned previously, AI and Big Data are set to help add value to medicine. There are many ways this has been suggested from improving drug adherence (according to the Annals of Internal Medicine, at least $100 billion is lost each year due to people not taking their medication) to healthtech, which is integrated into smartphones and smartwatches. People getting older and more accustomed to comfort means that R&D in pharma must both create new drugs and develop older drugs in order to increase returns. Proof of success for Value Added Medicines comes from the real-world consumers. Partnering with the tech sector could pay great dividends regarding the expectations of patients, who increasingly want more from their medicine.

Final Thoughts

Few companies have attempted a full rebuild of their IT systems (due to the halt in development and costs), however, Big Data may be the secret weapon here. From new dosage systems to drugs coming of patent, the future of pharma is exciting. Innovation in 2019 is looking at how the pharma industry can reverse ‘Eroom’s Law’ back to ‘Moore’s Law’ and take the decrease in accepted new drugs and increase in costs back to a more profitable position.

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