Author: Vivian Xie 14th May 2026

Despite record investment levels exceeding US$200 billion annually, the return on investment for research & development (R&D) in the pharma industry is in decline.

According to Deloitte's 2024 pharmaceutical innovation report, [1] development costs for a single drug now average $2.2 billion, while timelines stretch beyond a decade. For industry leaders navigating this challenging landscape, the solution lies not in working harder, but smarter, harnessing strategic partnerships that deliver cost-effective drug development solutions.

What’s more, pharmaceutical R&D productivity has actually been on a downward trajectory for the last 20 years. The phenomenon is known as ‘Eroom's Law’, and works quite literally like Moore's Law in reverse: while computing power doubles every 2 years, the number of new drugs approved per billion dollars spent has halved approximately every 9 years. This illustrates how efficiency in drug discovery has inversely tracked against technological advancement.

R&D Productivity Is in Decline – How Did This Happen?

As research published by the American Society for Biochemistry and Molecular Biology [2] demonstrates, failure rates in clinical trials remain stubbornly high, with 90% of drug candidates failing to reach approval. Between 40-50% of failures stem from lack of clinical efficacy, while around 30% result from unmanageable toxicity or side effects. As regulatory requirements have become increasingly stringent, they require larger patient populations and longer safety monitoring periods, which lengthen the process considerably. While the shift toward complex biologics and personalised medicines has been a therapeutic gamechanger, it has also introduced manufacturing and development challenges that traditional small-molecule approaches never faced.

These pressures are compounded by unique market dynamics, particularly for organisations based in the United States. Recent legislation on drug pricing, combined with increasing scrutiny from payers and pharmacy benefit managers (PBMs), has created additional urgency to reduce the cost of drug development without compromising innovation quality. BioSpace's analysis of 2025 R&D spending [3] reveals that the top 16 pharmaceutical companies spent US$159 billion on R&D in 2025, down 3.6% from the previous year, as companies aggressively refocused their pipelines and slashed spending on less productive programs.

Strategic Partnerships: The New Model for Pharmaceutical R&D

Forward-thinking pharmaceutical leaders recognise that vertical integration is no longer the most efficient path to market. Instead, the future belongs to organisations that strategically leverage external innovation through partnership strategies that combine internal expertise with specialised external capabilities.

These can offer multiple advantages. Contract Research Organisations (CROs) provide access to specialised expertise without the fixed costs of maintaining internal capabilities; as Contract Pharma's analysis of CRO partnerships [4] highlights, these independent teams are now “integral contributors to strategic decision making." Meanwhile, biotechnology startups bring disruptive innovations and novel approaches that challenge conventional thinking, and academic partnerships provide access to cutting-edge science and diverse patient populations. Together, these relationships can create a flexible, scalable R&D ecosystem that adapts to project needs while controlling costs.

The data supports this approach. Companies that actively engage in strategic partnerships report 30-40% reductions in development timelines and comparable cost savings. They access specialised technologies, from AI-driven drug discovery platforms to advanced biomarker identification tools, without capital-intensive infrastructure investments.

Beyond Cost Reduction: Building Sustainable Innovation Ecosystems

While reducing the time and costs linked to drug development remains a critical objective, it’s not the be all and end all for pharmaceutical R&D. Being open to partnering strategically with external organisations can give organisations access to new innovations and emerging technologies, providing them with a more flexible approach to their existing workflows and processes.

Events like CPHI Milan are designed to facilitate these deeper relationships through our comprehensive content tracks, which put issues like sustainability and technological integration front and centre of the conversation. The partnerships established at our events have become the foundation for sustained innovation, helping businesses find external capabilities that complement their own internal strengths AION Labs' summary of 2025 pharma-biotech deals [5] demonstrates the global nature of innovation partnerships, with Western companies increasingly partnering with Chinese biotech firms and other international innovators to access cutting-edge capabilities in ADCs, AI drug design, and other breakthrough technologies.

The CRO Zone: Specialised Expertise at Scale

The CRO landscape has matured significantly, with organisations now offering highly specialised services across the development continuum. ICON's partnership solutions overview [6] demonstrates how leading CROs now focus on "new and better ways of designing and executing clinical research, applying the harmonisation of human experience and expertise with the most robust suite of clinical capabilities in the industry."

European and Asian CROs often offer cost advantages of 30-50% compared to US-based alternatives, while maintaining regulatory standards that meet FDA requirements. BioPharma Dive's coverage of CRO partnerships [7] emphasises that "successful relationships with CRO partners are not vendor-to-vendor relationships, they're true partnerships grounded in open and honest communication." CPHI Milan provides the platform to establish these relationships with confidence, conducting due diligence and building rapport that virtual meetings cannot replicate. Whether you need early-stage discovery support, preclinical toxicology expertise, clinical trial management, or regulatory affairs guidance, the CRO Zone connects you with organisations that have demonstrated track records in your specific therapeutic areas.

The Start-up Market: Fresh Perspectives & Disruptive Innovation

Start-up partnerships offer unique advantages for pharmaceutical R&D productivity. These organisations operate with entrepreneurial agility, moving quickly from concept to implementation. BioSpace's analysis of 2025 pharma trends [8] reports that "pharmaceutical companies increasingly view biotech startups as critical sources of innovation, with partnership deals reaching record levels as Big Pharma seeks to replenish aging pipelines." Major deals in 2025 included Johnson & Johnson's US$14.6 billion acquisition of Intra-Cellular Therapies and Novartis' US$12 billion deal for Avidity Biosciences, demonstrating the value placed on innovative biotech capabilities.

The Start-up Market at CPHI Milan 2026 will feature companies working across the innovation spectrum. AI and machine learning platforms accelerate target identification and lead optimisation. Advanced analytics companies offer real-world evidence solutions that support regulatory submissions and market access. According to research on biologics manufacturing cost reduction, [9] "process intensification and continuous bioprocessing could reduce the cost of goods by around 30% while also minimizing facility footprint," making previously uneconomical therapies commercially viable.