Decision-Making Associated with Drug Candidates in the Research and Development (R&D) Pipeline

Abstract

Objectives: To investigate the types of information and resources either used or required for the management of products in the pipeline as perceived by decision-makers in the biotechnology and pharmaceutical (B&P) industries. More specifically, the objectives are to ascertain the strategic use of pharmacoeconomic (PE), financial, and decision- making tools and financing requirements amongst pipeline candidates. Methods: A study-specific survey instrument was used for the project. In detail, this survey is based upon the use of financial, PE, and decision-making tools for drug product development. Approximately 396 B&P firms were surveyed via postal mail, wherein the primary contact was the Chief Financial Officer (CFO). If the CFO was not listed on the firm’s website, the survey will be addressed to the Business and Development Officer (BDO) or Chief Executive Officer (CEO). The companies’ information will be identified by use of publicly-available databases. A modified form of a total survey design will be used for the postal mailings, including one initial mailing with a cover letter and survey, a follow-up reminder postcard, a second cover letter and survey for non-responders, and a final follow-up reminder postcard then after. Results: Survey instruments were completed by 20 firms, with 5 of them from public firms and 15 from the private sector. Capital and regulatory requirements and investor expectations are the most important factors considered during early and late phase clinical trials. Net present value (NPV) and internal rate of return (IRR) are the most commonly used financial analytic tools used for making research and development (R&D) decisions. PE are reported to be first used during all clinical phases prior to Food and Drug Administration (FDA) approval, and most drug candidates undergo formal PE evaluations. PE is also used in various areas of R&D and marketing components, such as licensing and go/no-go decisions. Capital/securities markets and venture capital (VC) are the primary sources of capital used in the development of a new drug. VC is important during all phases of R&D and numerous VC firms get involved. B&P firms disagree that VC companies should be involved with the managerial roles of the firm. Conclusions: It has been determined that the strategic use of PE, financial and decision-making tools, and capital requirements amongst pipeline candidates are important during all phases of R&D.