Expert insight

Pharma innovation – giving value for value received

2 April 2014
  • Andrew Jenner

The Chief Innovation Officer of the company that invented the way crisps in a tube are packed (rather than the wasteful packages full of air) coined the phrase: “What we’ve done to encourage innovation is make it ordinary.” The bio-pharmaceutical scientists and researchers deal with more complex issues than the humble potato crisp, such as how the human body can be helped to fight off diseases that are constantly evolving. But what we do have in common is that we don’t take enough time to remind ourselves of the impact of medicines and vaccines on our lives and the ability pharmaceutical innovation has to transform societies, making the unimaginable a reality.

Although innovating new medicines and vaccines is getting harder, and there is plenty of scope for new inventions, be it a medicine to cure the common cold or a vaccine to protect from contracting AIDS; there is plenty to be optimistic about. Every year, the US’s Food and Drug Administration approves on average 25 new drugs. In the past decade, over 340 new drugs have been approved to treat different chronic and non-chronic diseases including cancer.


It’s pretty well established that innovation or the process of translating an idea into an approved new drug takes anywhere from 10 – 15 years and costing at least a billion dollars. Such cost comes with some rewards as it supports high value jobs, helps strengthen local communities and the world’s economies alike. Yet it also carries potential risks: failure in proving safety of the new product for example.

Two recently published studies this year reveal that the value of innovation can be considered through two dimensions: the clinical and the economic.

Clinical value

The clinical value is highlighted in a study carried out by Charles River Associates earlier this year, “Assessing the value of biopharmaceutical innovation in key therapy areas in middle-income countries”.

This study reveals that in the case of rotavirus for example−the most common cause of severe diarrhoea among children in both industrialized and developing countries, claiming the lives of around 450,000 children every year, CRA compared the value that two recently-launched vaccines yielded in Brazil and Australia. The major benefit seen in both countries was a direct drop in hospitalization costs, but in Brazil they also witnessed a major decline in related mortality rates. So obviously both benefitted from these innovations, but given the nature of the disease burden the added value was greater for Brazil.

Economic value

The economic value is evidenced in a recent study carried out by WifOR, “First steps towards measuring the economic footprint of the industry”, the main key findings were that the pharmaceutical sector has roughly generated $441 billion worldwide in direct gross added value, equivalent of the economic strength of Argentina alone for 2011. Another value no less important is that the industry employs some 4.2 million people worldwide, the equivalent of Austria’s labour force which is huge.

There is no doubt that innovation in this sense is vital for the economic development of a given society through a productive workforce, through the ability of children not only to survive scourges of diseases but also to grow and learn making their way into the school system and the ability to later on contribute to the community, to be able to undertake economic activity and attract investment. In a nutshell, innovation is not only saving people’s lives and making them healthier, but also generating high-value opportunities the world needs.

The legacy of the therapeutic innovation

The top 20 companies invest on average 20 percent of their revenues in R&D to develop new medicines and vaccines. It is this investment and drive, year on year, which has given the world the legacy of medicines available to treat the major illnesses, such as diabetes, cancer, heart disease, asthma, HIV/AIDS. The recipes for producing the vast majority of the basic treatments (we call this first line medicines) are now produced by generic companies in India, China, South Africa and sold around to both the developing and developed world. Indeed, 80 percent of generic medicines are sold to the US and Europe. That is the legacy of our innovation.



  • Andrew Jenner