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Biotechnology, Health and Business in Canada, the United States and Worldwide

Tag Archives: IRR

Deloitte and Thomson Reuters Follow Up on R&D Value

An interesting follow-up study conducted by Thomson Reuters & Deloitte delving into what many in the industry have sought to understand better.  Last year Deloitte and Thomson Reuters conducted an analysis into value measurement at the “whole R&D business” level using Internal Rate of Return (IRR). This year, they have extended their analysis, looking at the same cohort of companies one year on.

This year’s analysis has highlighted the following key points:

  • R&D leaders are under continued pressure to justify the investment in the ‘business of R&D’ as many companies show a reduction in static IRR
  • Year on year (static) IRR measures reflect the productivity challenges within the industry but also conceal some underlying successes.
  • Analysis of dynamic returns allows us to identify encouraging signs within the industry, but also shine a light on areas of concern which should remain a focus for R&D leaders.
  • For a fair account of R&D performance, dynamic return measures need to be viewed over a four to five year timeframe, yet after one year some companies are demonstrating superior dynamic returns with respect to their peers.

Click here for the full report (pdf).

[ed. Welcome to Christian Hartmann, a new author here at the blog. He'll be blogging from the upcoming BIO 2012 conference in Boston.]

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