The Cross-Border Biotech Blog

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

Tag Archives: R&D

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.]

Pharma / Biotech R&D Budgets – A Proposal For Measuring Performance

During the BioFinance 2011 conference held in Toronto last week, one presenter showed a slide that outlined the number of new chemical entities (NCEs) approved by the FDA over a number of years. Since this slide was used in the context of the increase in global industry R&D budgets, it was meant to show that the huge increase in R&D budgets had not produced an appropriate increase in NCEs approved at the FDA. Is this the correct way in which R&D performance should be measured?

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Update on U.S. Biotech Bailout

Yesterday the U.S. House of Representatives’ Ways and Means Committee approved the “American Recovery and Reinvestment Plan,” (pdf) which did not include tax stimulus incentives proposed by the biotechnology industry (namely monetizing future Net Operating Losses and future R&D tax credits now in order to forgo those tax assets in the future).

The U.S. House of Representatives package included an enhanced R&D tax credit for up to 20% in R&D expenditures in 2009 and 2010, but limited to renewable energy technology.

The Senate Finance Committee economic stimulus tax bill (pdf) unveiled today extends for 2009 a more general provision that allows firms in a loss position to get cash from the government for research tax credits.

The Senate and House will need to resolve differences with respect to these R&D tax provisons in their respective economic stimulus packages.

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