Abstract
This study assesses the profitability of researching and developing new chemical entities (NCEs). A 36 year investment horizon is projected, based on a survey of R&D costs and on extensive U.S. sales data. Analysis is after taxes. The average NCE produces a real internal rate of return of 6.1% and a net present value of $76 million in 1976 dollars. Break even with an opportunity investment in corporate bonds occurs on average after 12 years of sales. Risk is apparent in that after 24 years of sales some two-thirds of NCEs return no more than the bonds do. The median NCE, not recovering average R&D costs, produces a negative return. Alternative assumptions are tested. Results are highly sensitive to drug price increases and early replacement by generics.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
