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Author: ZzF00L Big gold star, 5000 posts Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 892  
Subject: Re: Cost of Drug Innovation Date: 3/9/2006 11:43 AM
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Depends on what you count. A number that gets kicked around a lot is 800M, in part because of a recent (2004) book titled - 'The $800M pill' (haven't read it myself). See the link to the review at the bottom of the post.

Now some would argue that this number includes the R&D costs of failed or unfruitful projects - so the cost is really about half that for the actual development of a successful drug. But, can you really ignore the lost R&D costs for each successful drug developed.

Others would say that this does not include the sales, marketing, manufacturing, inventory, and other post approval costs that would increase the $800M number to 1.2 to 1.6B. But, (always but), this would only be on a successful drug launch so is not a development cost but a profit margin consideration.

As to small biotechs - they can do it much cheaper. A drug can probably be brought to approval for 150 to 200M or even less. But, this number can be all over the place as lots depends on the cost of drug production (small molecule vs. antibody, etc.) and the required size and time-frame of the phase III trial (indication specific). And, do you include in the average cost of drug development for a small biotech the lost capital from all the other small biotechs that failed to ever bring a drug to market, or even the development cost of the rest of the successful companies pipeline?

No simple answer - so $800M sounds about right.

P.S. - We haven't even addressed opportunity costs and product lifetimes and patent expiration and counterfeiting and price controls and distribution and inventory issues etc.

http://www.bio-itworld.com/archive/071404/firstbase.html
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