Innovative pharmaceutical companies spend a very high value and proportion of sales on R&D compared to other sectors.
Innovative pharmaceutical companies spend a very high value and proportion of sales on R&D compared to other sectors.

Research and development, and clinical trials - a key component in pharmaceuticals

By Brandstories Time of article published Mar 3, 2021

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Innovative multinational pharmaceutical companies play a significant role in contributing to the South African economy providing sustainable and inclusive growth.

In 2019, the Innovative Pharmaceuticals Association South Africa (IPASA) conducted a Footprint Study analysing the contribution of the pharmaceutical industry in the country’s economy.

The study concluded that multinational (MN) pharmaceutical companies have a significant impact on the country’s economy particularly in Research & Development (R&D), clinical research, job creation as well as manufacturing.

Innovative pharmaceutical companies spend a very high value and proportion of sales on R&D compared to other sectors. In South Africa, clinical research sponsorships by innovative pharmaceuticals are substantial and show no sign of slowing down. Over R1bn is currently planned for investment in upcoming and ongoing trials, which will benefit patients immensely.

Between 2016 and 2021, an estimated R2.95bn will have been spent by innovative multinational pharmaceutical companies in South Africa supporting clinical research into new treatments serving unmet medical needs. The volume and proportion of clinical research activity in SA sets the country apart from its developing economy peers but remains far from developed countries (e.g. UK having more than 6 times the number of trials per capita).

The R&D-based multinational pharmaceutical sector is a leader in the South African economy via its positive economic impact and its ability to grow by balancing turnover and employment growth. The sector is also an investor in the economy via niche manufacturing, its contribution to the innovative medicines cluster and corporate social investment initiatives.

The latest research measuring the return from pharmaceutical innovation shows that at 21.7%, the global innovative pharmaceutical industry has one of the highest R&D intensities of any sector globally, reflecting that R&D remains at the core of innovation.

With 25% of the world’s burden of disease, only 2% of all clinical trials are conducted in Africa. Boosting R&D on the continent could be a better means of unlocking immense untapped value and improve public health responses to diseases.

To ensure that South African patients derive value from this increased investment in R&D, innovative pharmaceutical companies believe that there is an urgent need for policy certainty and consistency, a substantial reduction in the backlog in registration of products by the regulator together with strategic assessments, remedies and incentives to level the domestic playing field.

Currently, it takes 10–15 years to develop a medicine or vaccine. However, with the high failure rate in pharma R&D, companies also experience major losses. For example, an early-phase compound may have a promising outlook, but only pre-clinical and clinical trials will demonstrate its efficacy, quality, and safety. In addition, lost investments may increase when a failure occurs in later R&D phases.

These challenges, however, have not diminished the industry’s innovative drive but have rather encouraged it to adopt new models of innovation. As the world fights the Covid-19 pandemic, the pharma industry is collaborating to ensure that the scientific community can respond quickly to the challenges this pandemic requires.

As a science-driven industry that aims to address some of the world’s biggest health care challenges, the research-based pharmaceutical industry has a clear role to play in developing new and improved medicines and vaccines to help respond to the Covid-19 pandemic. Biopharmaceutical companies with potentially relevant knowhow have established teams of scientists collaborating and checking their compound libraries for potential assets that could fight Covid-19.

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