Why do pharma firms sometimes prioritize “me-too” R&D projects over high-risk, high-reward “pioneer” programs?
One reason – not the only one, but a contributor – is that many pharma financial models assume first-in-class drugs will gain commercial traction more slowly than “followers”. The problem is that when a drug’s projected revenues are delayed in a financial forecast, this lowers its net present value – which can torpedo the already tenuous investment case for a risky, innovative R&D program.
