A recent report from the IQVIA Institute for Human Data Science highlights the evidence and trends to support the groundbreaking year that 2020 turned out to be for pharmaceutical R&D. In addition to the extraordinary achievement of bringing multiple COVID-19 vaccines to patients in record-setting time, and contrary to many expectations set as the pandemic spread across the globe, clinical trial activity, funding flows, new drug approvals and expansion of the industry pipeline of innovative medicines maintained historically high levels. And, in some cases, the industry set new records. These positive trends, occurring as the industry doubles down on its investment in and commitment to innovation, come with implications that the industry must wrestle with in the months and years ahead.

The industry demonstrated remarkable adaptability and agility in starting more clinical trials in 2020 than the prior year despite the widespread impact of the pandemic on study start-ups, subject enrolment and ongoing execution of clinical trial protocols. For example, oncology trial starts reached historically high levels, while the surge of COVID-19 related trials for novel therapeutics and vaccines resulted in over 850 interventional industry-sponsored studies being initiated during the year.

For pharmaceutical companies, the rapid reprioritisation of trials – especially for those enterprises that took on major COVID-19-related initiatives – will have longer-term implications for their research programmes in other therapy areas that were deprioritised during the past year. We also know that the shift to trials which are remote, virtual or decentralised, necessitated by the pandemic, may signal a step change in the adoption of some or all of these trial attributes. However, this will require additional review and alignment among a broad set of stakeholders, including regulators, investigators, study participants, sponsors and contract research organisations.

While clinical development productivity, a composite metric of success rates and trial complexity and duration developed by the IQVIA Institute, rose in 2020 for the first time in five years, the index of productivity remained below the level achieved at the beginning of the decade. Since 2010, the index has been impacted by lengthening trial durations, increasing complexity of disease targets and their associated trial protocol designs, and declining success rates.

Efforts to improve productivity are clear priorities across the industry. In particular, data- and technology-driven approaches to accelerate site identification, subject enrolment, and monitoring and data review activities have received enormous attention and investment. But further efforts are required, and the growing use of AI/ML applications reflect the latest efforts to address the productivity challenge.

At the same time, companies are looking to increase their scientific risk. This is in part because breakthrough therapeutics can bring step-change improvements in patient outcomes and are likely to be rewarded commercially and may be willing to lower their success rate proportionately with any reduction in effort (complexity and trial duration) that can be achieved through operational refinements. As a consequence, industry-level productivity may remain low for the foreseeable future or for as long as the current biomedical innovation ecosystem remains in its current configuration.

Growth in the industry’s early stage pipeline – products or platforms in discovery, preclinical or phase 1 clinical development – paused in 2020 and the total pipeline returned to 2018 levels following several years of double-digit expansion. At the same time, the late-stage pipeline – products in phase 2, 3 clinical development or the registration process – grew modestly overall in 2020, ending the year at an all-time high level. This reflects the sustained investment and commitment by the industry to develop and discover innovative therapeutics over the past several decades. The pipeline has also become proportionately more focused on oncology, particularly on rare cancer treatments. At the end of 2020, oncology drugs accounted for more than 40% of the early-stage and more than 30% of the late-stage pipeline, the result of a greater focus in this area over the past decade. And over half of the late-stage oncology pipeline is for rare cancers, including a wide range of next-generation biotherapeutics such as gene editing, CAR-T and RNA therapies.

While a large and diverse pipeline speaks to the strength of the industry overall, it also means that competition to advance the drugs in that pipeline is fierce. With over 3,000 companies controlling active development programmes, gaining access to the best scientific talent, trial investigators and sites, study participants who meet eligibility criteria for research programmes, and all the other resources necessary to bring new drugs successfully to regulatory approval is increasingly challenging. In particular, in those ‘hot’ areas which have multiple companies with multiple drug candidates with the same mechanism and overlapping characteristics, smaller or less-established companies may find it difficult to differentiate themselves and gain the support and resources necessary to advance their drug candidates as rapidly as they may hope. This of course is particularly the case in oncology, despite the unmet needs still being very significant in this disease area.

The shift in composition of the industry pipeline toward next generation therapeutics – now numbering over 600 in clinical development and at least another 600 in discovery or pre-clinical – also has implications for stakeholders. For example, the specific challenges of proper gene targeting and delivery, patient availability (especially those with rare disorders), manufacturing and regulatory oversight are significant. These challenges are exacerbated when the number of next generation therapeutics doubles over a two-year period, as it did from 2017 to 2019, even if growth paused in 2020.

The flow of funding from venture capital into life sciences and investment by large pharma companies remained strong during 2020, seemingly unaffected by the disruptions of the pandemic that impacted other parts of the economy. Venture funding rose by 50% above 2019 levels as interest and valuations in early-stage companies remained at all-time highs. Strategic transactions were buoyed by COVID-19-related deals, but remained strong in oncology, the largest area of strategic deal-making – including M&A, licensing and collaborations. Aggregate R&D expenditures by the 15 companies with the highest pharmaceutical sales reached $123bn in 2020 and exceeded 20% of sales for the first time.

Strong capital flow also brings with it high expectations for returns on that investment and pressures are high on pharmaceutical companies of all sizes to demonstrate adequate potential financial return. This requires greater focus on R&D programmes that can support differentiated drug profiles and superior efficacy/safety endpoints. It also means maximising efforts to bring efficiencies to drug development, typically through technology-enabled solutions.

For emerging biopharma companies, those spending less than $200m on R&D annually and generating less than $500m in sales contribute about two-thirds of the industry’s late-stage pipeline of molecules. This increased funding brings greater strategic flexibility including the opportunity to self-finance full clinical development programmes through to regulatory submission. This requires fresh thinking about viable pathways and post-approval commercialisation options, and the ability for small companies, often working on drugs for rare diseases, to ‘go-it-alone’.

In 2020, new drug launches reached a record high of 66 globally, including COVID-19 vaccines receiving emergency use authorisation, and with strong representation by oncology drugs and treatments for rare diseases. The number in the US remained above 50 for the third consecutive year. Over the past 20 years, a total of 871 new drugs have been launched globally, though fewer in any one country.

This large amount of innovation has brought multiple new treatment options to large numbers of patients around the world. It also brings intensified competition for manufacturers in the pharmaceutical marketplace, requiring clearer evidence of ever-greater differentiation and clinical endpoints that are superior to alternative treatment modalities. It also requires more precise messaging, education and outreach to healthcare professionals. The portfolio shift by most companies toward precision medicines, treatments for rare diseases including rare cancers, and drugs carrying narrower labels and smaller indicated populations also brings increased challenges for those companies to generate sufficient lifetime sales and profitability to deliver the expected return on the R&D investments that have been made in early years or decades. Yet the sustainability of the innovation ecosystem relies on these challenges being met – enabling future investment and progress as basic science and a large, diverse set of stakeholders together advance health for the benefit of all.

For more information, please see the IQVIA Institute for Human Data Science report Global Trends in R&D: Overview through 2020.

‘Aggregate R&D expenditures by the 15 companies with the highest pharmaceutical sales reached $123bn in 2020 and exceeded 20% of sales for the first time’