Understanding the financial ecosystem surrounding the development of medicines

Spreadsheets and medicine, photo by sharaku1216/Adobe Stock

sharaku1216/Adobe Stock

What is the issue?

Governments recognise the importance of the life sciences industry to address major population health needs as well as to bring economic growth and employment opportunities. Understanding the financing of medicines R&D can help support life sciences innovation and ensure affordable and equitable access to the benefits of healthcare innovation by healthcare systems and populations globally.

While there are numerous publications on the phases of R&D and on overall levels of investment, the economic and financial aspects of value creation and loss between different R&D phases are less well researched. Understanding how R&D is financed across the value chain, where and how transactions occur, and the way in which key investment and divestment decisions are taken, enables governments to make more informed policy decisions that optimise value for their citizens.

How are we helping?

RAND Europe is collaborating with Strategies in Regulated Markets (SiRM) and LEK Consulting on a study which aims to establish a more detailed and nuanced understanding of how life sciences R&D is financed, where investments and transactions occur and between whom, and where and how value is created. The project has been commissioned by the Dutch Ministry of Health, Welfare and Sport and will focus on the Netherlands, as well as other EU member states, the United Kingdom, and the United States.

The research team will conduct a literature review, analysis of proprietary databases providing financial information, interviews with a range of stakeholders (e.g. financial investors, research funders, medicines developers, and policymakers) and develop scenarios on plausible future directions for the financial ecosystem for medicines R&D. The outputs should be useful for future scientific research and contribute to an objective basis for a dialogue on the functioning of the financial ecosystem surrounding the development of medicines.