A New Approach to Assess Drug Development Performance

This article suggests that successful innovation in biopharmaceuticals is strongly related to the ability of firms to move compounds forward along the drug pipeline, relatively to other companies, within the same therapeutic area. We used this intuition to build indicators of performance at the firm-level and use them to conduct empirical analysis that relies upon a comprehensive database. We consider the effect of various factors on drug development performance, including R&D funds allocation across therapeutic areas and the proportion of biological molecules in the drug development portfolio. Subsequently, we show that a correlation exists between our performance variables and the per-capita growth of biopharmaceutical firms' revenues.