Rushed Innovation: Evidence from Drug Licensing

Hermosilla, Manuel

doi:10.1287/mnsc.2019.3530

Cited by 24 publications

(14 citation statements)

References 78 publications

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“…Our dataset illustrates that Biopharma company valuation is mainly driven by the lead product’s development stage. This is in line with previous studies investigating Biopharma acquisitions and therapeutic licensing agreements [ 6 , 7 , 17 ]. Our calculations also demonstrate downward sloping annual returns for advanced drug development stages (Supplementary Figure e1).…”

Section: Discussionsupporting

confidence: 92%

“…Assuming an investment horizon from Pre-Clinic to FDA approval, founders and capital providers of Biopharma companies with oncology therapeutics can expect to increase their invested capital to a greater extent compared to companies developing CNS and other therapeutic agents (p < 0.001). Estimated annual returns from Pre-Clinic to FDA approval were 26% (95%CI 21-33) for oncology, 17% (95%CI [13][14][15][16][17][18][19][20][21][22] for CNS, and 8% (95%CI 4-11) for other lead therapeutics (Table 2).…”

Section: Disease Areamentioning

confidence: 99%

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Valuation and Returns of Drug Development Companies: Lessons for Bioentrepreneurs and Investors

Michaeli

Yagmur

Achmadeev

et al. 2022

Ther Innov Regul Sci

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Objectives This study evaluates the association of Biopharma company valuation with the lead drug’s development stage, orphan status, number of indications, and disease area. We also estimated annual returns Bioentrepreneurs and investors can expect from founding and investing in drug development ventures. Methods SDC Thomson Reuter and S&P Capital IQ were screened for majority acquisitions of US and EU Biopharma companies developing new molecular entities for prescription use (SIC code: 2834). Acquisition data were complemented with drug characteristics extracted from clinicaltrials.gov, the US Food and Drug Administration (FDA), and deal announcements. Thereafter, company valuations were combined with previously published clinical development periods alongside orphan-, indication-, and disease-specific success rates to estimate annual returns for investments in drug developing companies. Results Based on a sample of 311 Biopharma acquisitions from 2005 to 2020, companies developing orphan, multi-indication, and oncology drugs were valued significantly higher than their peers during later development stages (p < 0.05). We also estimated significantly higher returns for shareholders of companies with orphan relative to non-orphan-designated lead drugs from Phase 1 to FDA approval (46% vs. 12%, p < 0.001). Drugs developed across multiple indications also provided higher returns than single-indication agents from Pre-Clinic to FDA approval (21% vs. 11%, p < 0.001). Returns for oncology drugs exceeded other disease areas (26% vs. 8%, p < 0.001). Conclusions Clinical and economic conditions surrounding orphan-designated drugs translate to a favorable financial risk-return profile for Bioentrepreneurs and investors. Bioentrepreneurs must be aware of the upside real option value their multi-indication drug could offer when negotiating acquisition or licensing agreements.

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Section: Discussionsupporting

confidence: 92%

Section: Disease Areamentioning

confidence: 99%

Valuation and Returns of Drug Development Companies: Lessons for Bioentrepreneurs and Investors

Michaeli

Yagmur

Achmadeev

et al. 2022

Ther Innov Regul Sci

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“…This estimate averaged $400 million in 2017. 13 The comprehensiveness of the Cortellis dataset has made it a popular data source for recent research in the area (e.g., Chandra et al, 2018;Gaessler and Wagner, 2019;Hermosilla, 2021). Cortellis uses information from a variety of sources, updated and curated daily by more than 500 experts.…”

Section: Datamentioning

confidence: 99%

Does consumer demand pull scientifically novel drug innovation?

Dranove

Garthwaite

Hermosilla

2022

The RAND J of Economics

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Prior literature shows that stronger consumer demand leads to increased pharmaceutical R&D. However, how strong these “demand‐pull” effects are for more scientifically novel drug innovation remains unknown. We address this question using comprehensive clinical trial data that include precise characterizations of the scientific approaches used in tested molecules. We characterize scientific novelty as the number of times each approach has been used in the past. Exploiting exogenous demand variation introduced by the introduction of Medicare Part D, we find strong evidence that demand‐pull effects are markedly skewed in favor of non‐novel or “follow‐on” drug R&D.

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“…As Harris et al (2020) remark concerning fast innovation for the Covid-19 pandemic, '[i]t is sometimes necessary to forego high regulatory standards in order to rapidly address new demands at low cost'. Coined by Hermosilla (2020) to refer to pharmaceutical companies rushing through licensing processes to the detriment of the product, 'rushed innovation' is a useful concept to explain the trade-offs between innovation, market advantage and regulatory compliance.…”

Section: The Socio-technological Aspects Of Rushed Innovation During the Covid-19 Pandemicmentioning

confidence: 99%

Innovation under pressure: Implications for data privacy during the Covid-19 pandemic

et al. 2020

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The global Covid-19 pandemic has resulted in social and economic disruption unprecedented in the modern era. Many countries have introduced severe measures to contain the virus, including travel restrictions, public event bans, non-essential business closures and remote work policies. While digital technologies help governments and organizations to enforce protection measures, such as contact tracing, their rushed deployment and adoption also raises profound concerns about surveillance, privacy and data protection. This article presents two critical cases on digital surveillance technologies implemented during the Covid-19 pandemic and delineates the privacy implications thereof. We explain the contextual nature of privacy trade-offs during a pandemic and explore how regulatory and technical responses are needed to protect privacy in such circumstances. By providing a multi-disciplinary conversation on the value of privacy and data protection during a global pandemic, this article reflects on the implications digital solutions have for the future and raises the question of whether there is a way to have expedited privacy assessments that could anticipate and help mitigate adverse privacy implications these may have on society.

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Rushed Innovation: Evidence from Drug Licensing

Cited by 24 publications

References 78 publications

Valuation and Returns of Drug Development Companies: Lessons for Bioentrepreneurs and Investors

Valuation and Returns of Drug Development Companies: Lessons for Bioentrepreneurs and Investors

Does consumer demand pull scientifically novel drug innovation?

Innovation under pressure: Implications for data privacy during the Covid-19 pandemic

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