opinion : pharmaceutical R&D

This article published in slate summarizes a long running debate between the pharmaceutical industry and consumer advocates. while both sides make good points (drug development is high risk, but pharma industry estimates are certainly inflated), neither is making refference to any good data. I am not sure why this is the case - puplic companies are required to disclose there quarterly expenditures and most describe how many candidates are in the pipeline. It seems to me that a quick look at the annual reports would give exact numbers and allow for an informed argument about R&D costs vs profits. here is an example:

Pfizer

R&D expenditures (2009): $7.8 billion (http://www.pfizer.com/files/annualreport/2009/financial/financial2009.pdf)

drug dev projects: (sept 2010): 92 new drugs (http://www.pfizer.com/files/research/pipeline/2011_0228/pipeline_2011_0228.pdf)

avg spending per new drug product per yr: $84.8 million

multiplying the amount spent per yr x number of years that it takes to come to market (about 10) gives almost the number that the pharmaceutical industry claims it takes to develop each drug ($850 million by my estimate). activists claim that since only a few drugs actually come to market and much of the expenditure for R&D is on postmarketing licensing trials, these numbers are skewed however. While I concede that it is true that companies do not actually spend $850 million directly developing any one drug, it is reasonable to assign this value to the cost of bringing a drug to market based on company's actual R&D expenses.

full disclosure - i used to work in clinical trials for Sanofi-aventis