R&D strategy in the U.S. pharmaceutical industry

The adverse economic impacts of the 1962 Kefauver-Harris Amendments to the Food, Drug and Cosmetic Act have transformed the U.S. pharmaceutical industry. The key elements of this transformation include declining rates of innovation, huge increases in R&D costs and risks, lowered profitability, and an erosion of U.S. technological leadership. U.S. pharmaceutical firms must develop new, creative R&D strategies in order to cope with this complex and demanding environment. U.S. firms have responded to more stringent domestic regulation by sharply increasing both foreign R&D expenditures and initial clinical testing of new chemical entities at foreign locations.New patterns of project selection strategies have begun to emerge in the 1970s. As the total number of R&D projects has been cut back, pharmaceutical firms have focused resources on those disease areas with the highest epidemiological importance. To cope with the increasing riskiness of drug R&D firms have shifted dollars from research to development. Pharmaceutical firms are also likely to alter their strategies for discovering new drugs. As firms reduce explorative, basic research, more structured, engineering approaches will receive increased emphasis. Because individual drug companies are likely to have reduced capacity for originating drugs within their own laboratories, competition among firms for access to new compounds and research ideas is likely to in tensify.