Pharma Innovation: Risk & Reward part 1 of 2 Oncology continues to be the main R&D focus area in the net present value (NPV), or 30.6% of the total NPV resultant from the biopharma industry. current clinical pipeline. Systemic anti-infectives demonstrate a lower ® clinical development cost per approval with $0.2bn, but the relatively EvaluatePharma 昀椀nds oncology to be the area with the highest forecasted clinical development expenditure, unsurprisingly leading lower unmet need and recent pricing pressures lead to NPV of the to the highest forecast number of FDA approvals of any therapy current pipeline of just $8.3bn. With a forecasted clinical development area. At $0.7bn of clinical development spend per approval (based cost per approval of $1.0bn, cardiovascular drugs show the highest on sunk R&D cost, and product-speci昀椀c PTRS from EvaluatePharma R&D cost burden, due to the large-scale nature of their trials; the low Vision® number of risk adjusted approvals and relatively low NPV of $5.6bn is ), oncology is one of the more expensive areas in which to develop new therapies, but this cost is forecast to result in $78.2bn in perhaps resultant of this 昀椀nancial barrier to entry. Figure 5: Clinical Development Spend vs Risk Adjusted FDA Approvals by Therapy Area ® Source: EvaluatePharma Vision, May 2019 100 90 Higher cost per approval Circle Area = Total NPV ($bn) 80 Oncology 70 60 50 Central Nervous System 40 Respiratory 30 Cardiovascular Sensory Total Clinical Development Spend ($bn)Organs Immunomodulators 20 Endocrine Lower cost per approval 10 Systemic Anti-infectives Gastro-Intestinal Dermatology 0 0 20 40 60 80 100 120 140 Risk Adjusted FDA Approvals Fill in the gaps on pharma with EvaluatePharma Vision Oncology may be one of the most expensive therapy areas, but ________ is forecast to provide the best returns. On average, it typically costs ________ to run a phase III trial program for ________. Within your portfolio, the product with the highest risk pro昀椀le is ________ when benchmarked against other drugs in development. ® 14 EvaluatePharma World Preview 2019 Copyright © 2019 Evaluate Ltd. All rights reserved.