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The New Jersey Life Sciences Vendors Alliance (NJLSVA) is a coalition of businesses, individuals and academia who provide goods and services to New Jersey’s life sciences companies.

The NJLSVA was founded to educate suppliers on trends in industry procurement and public policy that affects the life sciences industry.

Pharmalot: New Analysis Explores to Extent Drugmakers Are Having Trouble Sustaining Innovation

New York, NY, February 4, 2015 ― Is the biopharmaceutical industry undergoing a big squeeze?

Pharmalot, a Wall Street Journal blog, today reports that a new analysis argues that drug makers are experiencing a challenging combination of rising overall costs and, in many cases, pressure on pricing.

Taken together, “the forces of market competition… have essentially eroded the economic profitability of newly launched brand-name” drugs in recent years, according to a paper in Health Affairs, the policy journal.

As a result, Pharmalot reports that the average present value of lifetime sales of 466 novel medicines peaked in between 2000 and 2004, but then began declining.

This trend held true for both small molecules, which are typically pills, and biologics, which are injected or infused medications. Average present value, by the way, was defined as the sales value discounted for the cost of capital and reflects the time value of money.

The analysis, which was partly funded by industry, found the “vast majority” of novel medicines generated “relatively small lifetime sales” — 75% had sales of less than $4.5 billion and 50% achieved sales of less than $1.5 billion.

These averages also masked substantial volatility, especially for biologics, suggesting that sustaining earnings returns may become more difficult, according to the authors.

The Pharmaceutical Research & Manufacturers of America (PhRMA) funded the data analysis published in the Health Affairs study.

According to Pharmalot, the data came from the IMS Institute for Healthcare Informatics and three IMS staffers are co-authors. Berndt says he did not directly accept PhRMA funds, and acknowledged drug makers may “try to use [the findings] to take off some of the pressure” they encounter over pricing.

A PhRMA spokeswoman told Pharmalot, the paper provides “important context for discussions about the future of innovation and health care policy… To sustain future innovation there must be an understanding of the challenges that exist in bringing a new medicine to market.”

For the full Pharmalot story, click here.

Pharmalot, a Wall Street Journal blog and a rich source of biopharma sector news, explores the fast-moving, complicated world that develops and markets medicines — and the drug makers that are attempting to replenish their pipelines while grappling with pricing and regulatory dictates, among many other challenges.

You may also follow Pharmalot on Twitter at @Pharmalot.