Pharma R&D ROI Spikes in 2023 as ‘Breakthroughs’ Re-Energize Industry: Report

Deloitte_iStock, Redfox_Ca

Pictured: Deloitte's building in Canada/iStock, Redfox_Ca

Following a 14-year low in 2022, the pharmaceuticals industry in 2023 saw an encouraging spike in returns for their investments in research and development, according to the annual industry productivity report from audit and accounting firm Deloitte.

The report found that internal rate of return (IRR)—a measure that estimates the profitability of certain investments—shot up to 4.1% in 2023, compared to only 1.2% in 2022. According to Deloitte, IRR is a complex variable that looks at both the industry’s cycle times and costs to develop an asset, as well as the risk-adjusted projected sales of its products.

One of the main drivers of pharma’s increased productivity in 2023 was the approval of several high-value assets. GLP-1 receptor agonists contributed strongly to the industry’s productivity, especially because it targets a large patient population. Other notable market entrants include antibody therapies for early-stage Alzheimer’s disease and several mRNA vaccines.

“The scientific breakthroughs enabling the targeting of these large patient population indications has the potential to reignite the landscape of blockbuster assets and impact positively the health outcomes of a greater proportion of the global population,” the Deloitte report concluded.

Deloitte has been tracking the industry’s returns on its late-state pipelines since 2010 and has recorded an overall downward trend in productivity. The slump was briefly broken in 2021, when the pandemic brought in a wave of investor dollars to biopharma. However, returns took a nosedive in 2022 reaching an IRR of just 1.2%, the industry’s lowest in 14 years.

In addition to improving return on investment (ROI), Deloitte also noted that the total R&D spending by the industry has jumped to $145.5 billion in 2023, up from $139.2 billion in 2022. This trend was matched by a similar rise in total revenue, with the top 20 pharma R&D sales growing 9.6% last year.

At the same time, the average cost to usher an asset from discovery to commercialization has remained largely flat at around $2.3 million per asset. Average forecast peak sales have also dropped, from a record high of $500 million in 2021, driven mainly by COVID-19 demand, to $362 million in 2023.

Despite finding an increase in returns, the Deloitte report notes that maintaining and improving productivity in biopharma R&D “will never be easy,” particularly as the industry will always need to balance its costs of development with the sales of its products. Multiple external factors can drastically influence this balance, according to the report.

In 2024, Deloitte flagged regulatory changes—particularly the Inflation Reduction Act—inflationary pressures and increasing protocol complexity as sources of pressure on the industry’s R&D pipeline. The “unprecedented scale of loss of exclusivity” for several high-value assets will also prove to be a barrier for the industry’s productivity.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at or

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