The R&D Productivity Crisis: Understanding the Challenge

This decline in R&D productivity is one of the pharma sector’s most pressing challenges  facing the sector. FierceBiotech’s analysis [1] of the 2024 Deloitte pharmaceutical innovation report points out that drug development cost pharma US$2.23 billion per asset that year, up from US$2.12 billion the year before. This escalation reflects both rising R&D expenditure and declining pipeline productivity, with costs increasing due to longer trial times, more intricate research areas, macroeconomic factors, and high attrition rates.

The implications are profound. Each programme must generate higher risk-adjusted value to justify its development cost, creating pressure on portfolio strategies and forcing difficult prioritisation decisions. Companies with portfolios containing many lower-forecast-value assets face specific challenges, as the economics of development become increasingly unfavourable for all but the few candidates with blockbuster potential.

Research confirms that pharmaceutical R&D productivity, measured as the number of new molecular entities (NMEs) approved per billion dollars of R&D spending, has declined by approximately 80% over the past 70 years. This phenomenon reflects the reality that despite technological advances, drug development has become progressively more difficult, expensive, and time-consuming.

What’s more, there is no single factor driving the crisis. Between tackling diseases with poorly understood biology, expanding regulatory requirements (particularly for novel modalities like cell and gene therapies), and complex protocols that increase the cost of clinical trials, failure rates remain high, with attrition occurring at later stages of development.

BioSpace reports that pharma R&D spending dropped 3.6% in 2025, [2] with the top 16 pharmaceutical companies spending $6 billion less on R&D year-on-year as companies aggressively refocused their pipelines and slashed spending on less productive programmes. This disconnect between investment and output underscores the need to find more efficient approaches to development through strategic partnerships and innovative technologies.

Improving R&D Productivity Through Strategic Partnerships

Faced with declining productivity and rising costs, pharmaceutical companies are fundamentally rethinking their R&D models. The traditional fully integrated approach, where companies conduct all research, development, and manufacturing internally, is becoming less and less common. Instead, businesses are adopting partnership-based models that leverage external expertise, share risk, and access specialised capabilities without massive capital investments.

Leading pharmaceutical companies are increasingly using what are called "network orchestrator" models. This allows them to position themselves at the centre of innovation ecosystems comprising CROs, academic institutions, biotechnology companies, technology providers, and specialised service organisations. These networks enable access to cutting-edge science, flexible capacity, diverse expertise, and risk-sharing models whilst maintaining oversight on their development programmes.

The economic advantages are substantial. Industry research demonstrates that strategic outsourcing to CROs can reduce development costs by 30-40% compared to fully internal approaches while also accelerating timelines by 15-25%. These savings derive from multiple sources; the specialised expertise provided by CROs can improve study design efficiency, their established site networks accelerate patient recruitment, their experience across multiple programmes helps bring process optimisation insights, and their flexible capacity model may eliminate the fixed costs of maintaining internal infrastructure.

Beyond cost reduction, partnerships provide access to innovation that would be prohibitively expensive to develop internally. This is especially important for smaller biotechnology and pharmaceutical organisations lacking the capacity of larger pharmaceutical conglomerates. Yet, the big pharmaceutical players are also taking advantage of these partnerships. Approximately 70% of drugs in development at major pharmaceutical companies originated externally, whether through licensing agreements, acquisitions, or collaborations with biotechnology companies and academic institutions. This external innovation dependence reflects the reality that breakthrough science increasingly emerges from specialised organisations rather than large pharmaceutical R&D departments.

Market intelligence indicates that pharmaceutical partnerships reached record levels in 2025, with deal values exceeding US$180 billion. This surge reflects the industry's recognition that collaboration, rather than internal development alone, represents the most viable path to sustainable innovation. The most successful partnerships combine complementary capabilities, pairing Big Pharma's regulatory expertise, commercial infrastructure, and financial resources with biotech innovation, CRO operational excellence, and dedicate technological support.

Making the Right Connections with CROs

The global CRO market reached US$82.3 billion in 2024 and is projected to grow substantially, reflecting pharmaceutical companies' increasing reliance on external research partners. This growth spans all therapeutic areas and development phases, with particularly strong demand for oncology expertise, rare disease capabilities, and advanced therapy development.

Industry experts emphasise that successful CRO partnerships depend on careful evaluation of therapeutic expertise, regulatory experience, geographic reach, technology platforms, and cultural alignment. The dedicated CRO Zone at CPHI Milan is designed to make it easier than ever for organisations to not only meet potential partners but to also get the measure of their work, and discover capabilities and compatibility far more effectively than remote assessments.

For novel modalities, specialised CROs provide critical capabilities that pharmaceutical companies may not possess internally. The complexity of advanced therapies has created strong demand for CROs who specialise in manufacturing, analytical, and regulatory expertise. Partnering to access these capabilities enables companies to pursue advanced therapy programmes without the massive capital investments required to build internal infrastructure.

Attendees to CPHI Milan will be able to explore comprehensive capabilities from exhibiting CROs offering full-service clinical development across the development lifecycle, encompassing study design, site selection and management, patient recruitment, data management, biostatistics, and regulatory submission support. Their global infrastructure and therapeutic expertise allow for the execution of complex multinational trials that would challenge most pharmaceutical companies' internal capabilities.

Discover the Breakthroughs Defining the Future of Pharma

Whilst established CROs provide proven capabilities and reliable execution, start-up companies often deliver the breakthrough innovations that fundamentally improve R&D productivity. From artificial intelligence for drug discovery and development, organ-on-chip and microphysiological systems for preclinical testing, and patient recruitment and engagement technologies, these are innovations which promise to reduce costs, accelerate timelines, and improve success rates.

AI-Powered Drug Discovery: Transforming Development Economics

Artificial intelligence has shown great promise [3] for decreasing the timelines and costs associated with drug discovery; the market is projected to grow from US$4.6 billion in 2025 to US$49.5 billion by 2034, reflecting the technology's transformative potential. Analysis from Coherent Solutions [4] demonstrates that AI platforms can reduce drug discovery costs by up to 40% and slash development timelines from five years to as little as 12-18 months. By streamlining the screening process and quickly identifying promising candidates, AI is helping biopharma companies bring new therapies to market faster and more efficiently.

Patient Recruitment Technologies: Solving Clinical Development's Biggest Bottleneck

According to CCRPS analysis, recruitment delays drive 80% of trial extensions [5] and burn millions in budget, demonstrating the immediate need for improvement in patient recruitment and retention. Fortunately, a new wave of data-driven outreach, AI-powered feasibility and decentralised engagement tools is cutting screen failure rates and accelerating first-patient-in.

Introducing AI-powered patient identification systems can reduce recruitment timelines by 50-70%, simply by analysing electronic health records (EHR) to identify eligible participants. This offers a workaround to the delays commonly associated with patient recruitment, delivering substantial savings in time and cost while improving trial diversity.

Modern approaches to patient recruitment combine EHR mining, digital marketing and AI-driven matching to dramatically boost enrolment rates. Evidence from industry reports indicates that digital campaigns have met recruitment goals up to 15x faster than traditional methods, with corresponding reductions in per-patient recruitment costs.

Organ-on-Chip and Microphysiological Systems

Microphysiological systems offer another transformative technology for improving R&D productivity. These organ-on-chip platforms replicate human tissue and organ function, enabling more predictive preclinical testing than traditional animal models. With the ability to identify safety issues and efficacy limitations earlier in the development process, these systems reduce expensive late-stage failures while simultaneously addressing ethical concerns about animal testing.

The Start-Up Market at CPHI Milan provides pharmaceutical companies with early access to innovations like these, letting you evaluate your organisational needs and forge potential partnerships before technologies become widely adopted.