TD Cowen Insight
Biopharma R&D leaders are key constituency for biopharma, tools and health care services investors. Some command $1B+ budgets, and all make critical drug development decisions. In our Biopharma R&D Leader Survey we surveyed 82 R&D leaders on the Inflation Reduction Act (IRA), FDA policies, and the adoption of new R&D tools and services including AI and single cell sequencing.
We found a continued appetite for FDA’s accelerated approval pathway, growing adoption of, contract research organizations (CROs), and healthy R&D spend. However, the IRA could force a rethink of life cycle management, impacting future R&D costs.
R&D is the Engine of Innovation
Biopharma R&D leaders are a key constituency at the center of myriad issues that affect the sector. Their perspectives can help biopharma investors gain a sense of where the industry is headed amid some of these major changes.
Beyond steering new drug candidates from discovery through development, these leaders offer a critical lens through which the impacts of the Inflation Reduction Act (IRA) and shifting trends at the FDA can be viewed. Biopharma companies are also the largest customer base for life science tools and the lifeblood of CROs. The R&D leaders at these biopharma companies have their pulse on clinical operations, lab tools, and technologies, with some commanding $1B+ annual budgets. Life science tools and health care services investors can gain a deeper understanding of future sector growth from these leaders’ insights.
TD Cowen Biopharma R&D Leader Survey Overview
TD Cowen’s proprietary blinded survey includes insights from 82 R&D leaders from biopharma companies covered by our biotech and pharma analysts, supplemented with leaders from non-covered companies. We delve into critical issues that are affecting current and future R&D decision-making, timelines, and priorities.
Key topics include:
- Implications of the IRA on R&D processes and priorities, plus broader R&D trends
- Current perspective on the FDA
- The adoption and perspective of drug developers on R&D modernization tools (decentralized clinical trials, CROs, single-cell sequencing, AI, and others)
Takeaways From Our R&D Leader Survey
Overall, we find optimism in greater adoption of FDA’s accelerated approval pathway, robust 2024 R&D outlook, and increased uptake of innovative life science tools and services.
On the flip side it is perhaps less surprising that we find a fair amount of negativity surrounding the IRA.
At its heart, the IRA brings government price negotiations to pharmaceuticals. The ramifications of that on R&D are twofold. First, negotiations start sooner for small molecules (9 years after their first FDA approval) followed by biologics (13 years post initial FDA approval). Second, the countdown to negotiations is triggered immediately following the first FDA approval of a new drug (or second approval for an Orphan drug). Therefore, indications added from post-launch R&D efforts would enjoy far less time on the market before negotiations.
Weighted responses from our survey indicate that the IRA will cause companies to reduce their small molecule drug development by ~34% in favor of biologics and cause over half of companies to rethink their life cycle management programs. That is, the trials and studies that come after a drug receives its initial approval. Some are considering cutting back on secondary indications or running studies simultaneously across all indications for which a molecule might be expected to work. Both could have significant effects on a company’s P&L and could require significant capital raises to support large late-stage development program
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