Performance-focused metrics supporting forward-looking decision making critical for drug companies

Drug companies racing to develop new products to replace drugs coming off patent are finding that success is increasingly tied to the company's ability to align operational goals with strategic objectives, according to a panel of pharmaceutical and biotech industry leaders recently convened by the Tufts Center for the Study of Drug Development.

The group also noted that greater reliance on performance-focused metrics that support forward-looking decision making, as opposed to milestone-focused measures, is critical to creating top-performing organizations.

Tufts CSDD Director Kenneth I Kaitin said, "Since only three in 10 new drugs, on average, generate sufficient revenues to sustain R&D, the imperative for drug developers is to not only increase R&D productivity, but also to transform the way companies conduct research and development. Metrics that tie operational and businesses goals help developers focus scarce resources in their race against expiring patents."

According to Tufts CSDD, current worldwide sales for top selling drugs coming off patent from 2009 through 2012 exceed $88 billion, including 25 blockbusters -- drugs with annual sales of $1 billion or more.

"The best performing companies are working with contract research organizations [CROs] more as partners and less as service providers," Kaitin said. "They're also actively collaborating with global regulatory agencies and conducting more of their clinical trials offshore."

The pharmaceutical and biotech executives, who convene several times a year at the Tufts CSDD Executive Forum Roundtable Series, also noted that:

-- Sophisticated partnerships between pharmaceutical companies, biotech firms, and CROs let drug sponsors focus on their core competencies while relying on external partners to conduct non-core activities. -- Technical advances, such as the use of biomarkers and e-data management technologies, are helping developers improve drug development efficiency.