UNPACKING THE INVESTMENT EQUATION: HOW POLICY CHOICES FEED INTO PHARMACEUTICAL INVESTMENT DECISIONS
Europe has the scientific and industrial base to lead in pharmaceutical innovation. Yet its share of global R&D investment fell from 41 per cent in 2001 to 31 per cent in 2022, and its share of global clinical trials fell from 22 per cent in 2013 to 12 per cent in 2023. The European Life Sciences Strategy and the proposed European Biotech Act aim to reverse this.
In this Insight piece, we use the investment equation, the risk-adjusted net present value (rNPV) model, to trace how policy on regulation, market access, pricing, reimbursement, skills, and financing feeds into five drivers of pharmaceutical investment: the probability of success, revenues, costs, time and the return investors require.
Because these policies act on the same investment decision, they cannot be assessed in isolation. Faster development and lower costs may be offset if slow market access or lower prices reduce expected revenues. Europe therefore needs policies that reinforce rather than offset each other.
Read our full piece below for further details and notes.
