Research and Development (R&D) is becoming a significant player in the manufacture of cancer treatment drugs. The pharmaceutical industry is charged with the responsibility of researching and developing the drugs for the treatment of cancer, and companies involved in the research recognize the importance of R&D. Since the inception of this industry, it has evolved and successively adapted to advances in medicine, epidemiology, biology, information technology and economics. These advances have further helped the development of cancer cures globally and enabled combating the adverse effects of cancerous illnesses. However, the industry has had numerous challenges that have impeded its growth. For instance, soaring R&D costs, slow sales growth and shortening product life cycles have created a hostile climate for effective research and development of cancer cures (PricewaterhouseCoopers, 1998).


Between 1998 and 2005, it was expected that the top 20 pharmaceutical companies would experience a rise in R&D costs per company from an average of $1.2 billion per year to $2.5 billion. Given the prices during that time, it was estimated that R&D costs per drug would be $500 million and $350 million which was enough to produce new drugs between 26 and 37 respectively, each over a similar period of time. It was projected that such estimates would present a four to six fold increase in the number of new drugs that were emerging from the top 20 companies. R&D produced a productivity level that was highly unconceivable. It simply meant that the number of new drugs being released by each pharmaceutical company in that time period was expected to be close to the 45 new drugs mark per annum being produced by the entire industry (PWC, 1998).

With pharmaceuticals experiencing a rise in drug production costs, most companies sought to embrace innovation in order to cut down on production costs. A pharmaceutical company in India, Nicholas Piramal, aimed at developing a new cancer drug at just $50 million. Following the example of the software and Information Technology industries in India which combine high quality scientists and low costs for enhanced productivity, India’s pharmaceuticals industries also aim at tapping the general low costs and the pool of English-speaking scientists to develop new drugs. Just like other Indian companies, Nicholas Piramal aimed to invest in innovation by harnessing skills and knowledge. They aim to move away from the practice of re-engineering drugs made by other companies and develop their own instead (Dyer & Merchant, 2004).

However, despite the high expectations, enthusiasm and optimism from pharmaceutical companies, the obstacles and challenges they face are numerous. It is estimated that only 1 in 10 drugs which enter in clinical trials make it to the market. In the U.S. and Europe, for instance, in the last few decades, biotechnology companies have been established and staffed by well-trained scientists yet only a handful has been able to actually develop a drug (Dyer & Merchant, 2004).

Prices and drug development

Can't complete your paper?
Need a quick, creative solution?

Never too late to get it done by our pros

Write My Paper

Rising costs and complexities in drug development have been a major challenge in research on pharmaceutical drugs. Downward pressure on prices combined with a growing complexity in drug development and approval cycles drove R&D and capital expenditures upwards. In 2001, R&D expenditures of the top 50 pharmaceutical companies worldwide reached $50 billion. In the U.S., R&D as a sales percentage of the pharmaceutical companies rose from 15.9% in 1990 to 18.5% in 2001; by contrast, the R&D-to-sales ratio on average for all U.S. industries in 2001 was below 4%. Drug development became costly due to the high risks involved and research intensity of the pharmaceutical industry. It was estimated that up to 50% of development money was used on products that never actually reached the market. Statistics indicated that only one in every 5,000 to 10,000 compounds tested in the laboratory was approved, and this was a major setback to the pharmaceutical industry. Furthermore, it was estimated that only 30% of the products that did eventually reach the market achieved the commercial success that was necessary to recover the average investment on research. Drug development costs also increased because drug development time became longer. In the 1960s, the total drug development time was at an average of 8.1 years; however, this grew to 14.2 years in the 1990s. This led to increases in the development costs: in 1976 from an average of $54 million per drug to $802 million in 2000. A study conducted by Bain & Co. in 2003 established that it cost $1.7 billion to develop and bring a new drug to the market when commercialization and other costs are included in the R&D costs (Bradley & Webber, 2004).

The systematic and careful monitoring of the drug development process by the Food and Drug Administration in the U.S. and other comparable institutions around the world means that a drug is thoroughly vetted before it is accepted. This process is long and a rejection by such an institution or even mandatory regulatory delays could jeopardize the drug development process and greatly affect the timing of marketing the drug. For drugs considered as “blockbuster” drugs, a single day delay could amount to millions of dollars in lost revenues. Even after reaching the market, drugs are still monitored and if health concerns arise and are reported, then FDA can easily pull them out of the market or at request of the manufacturers. For instance, Bayer Pharmaceutical in August 2001 withdrew its cholesterol lowering statin drug from the market after it was reported that its use had caused at least 40 deaths. The FDA also monitors the drug manufacturing process and if manufacturing regulations are not adhered to, the companies may be fined or closed (Bradley & Webber, 2004).

Challanges for the pharmaceutical industry

Another challenge facing the pharmaceutical industry has been outside pressures such as price pressures from managed care and competition from generics alongside other political and social pressures. In the U.S., for instance, managed care organizations pressured drug manufacturers into reducing drug prices. The managed care organizations in the U.S. made about 75% of all drug purchases and thus, their increased purchasing power enabled them to extract price concessions from drug makers.

Generic substitutes provided stiff competition to pharmaceutical manufacturers. Prior to patent expiration, generics were priced at 30% to 90% less compared to the brand named drugs. With the share of the U.S. prescription drugs market rising each year, it was estimated that by 2005 the generics would have claimed a 57% market share. With the growth of generic drugs, favored through several factors such as the loss of patents by branded drugs, generics have been infiltrating the market and continue to frustrate efforts by pharmaceutical companies to recover costs incurred on R&D. There was evidence that this infiltration of generics was happening at a high rate than was expected. This was put into perspective prior to 2002 when in it was estimated by analysts that a branded drug would lose 80% of its volume to generic drugs within a year of patent expiry. This actually came to pass in August 2001 when antidepressant drug Prozac by Eli Lilly’s went off patent and within 45 days lost 70% of its volume (Bradley & Webber, 2004).

With pharmaceuticals facing a myriad of challenges, it is imperative that R&D is wholly embraced albeit with strategies aimed at keeping the goals R&D in sight. The steps taken by pharmaceutical companies in developing economies to research on pharmaceutical treatments remain a case study on how innovation can be used to develop drugs despite all the challenges in the industry.

With the ever increasing costs of manufacturing drugs, Indian pharmaceutical companies have come up with innovative strategies aimed at enabling them to manufacture drugs at relatively low costs hence creating low-priced pharmaceutical drugs. Indian companies, through the manufacture of generics, are aiming to break into the international pharmaceutical market by taking advantage of their low cost manufacturing. Indian firms also concentrate more on the manufacture of generic versions of biotechnology drugs. This is because these drugs are more complicated yet have lower labor and land costs compared to rival drugs. Indian companies are also concentrating more on lower risk R&D that plays to their advantages in chemistry such as devising new methods of delivering established drugs. Ranbaxy, for instance, is receiving royalties for developing a once a day version of Cipro, an antibiotic from Bayer of Germany. Indian companies are also collaborating with U.S. and European companies instead of competing against them. This strategy helps these companies devolve some huge developmental costs and learn how to manage research projects effectively (Dyer & Merchant, 2004).

Strategies being used in the developing economies have been found reliable and significant in the pharmaceuticals industry, and have caused a substantial shift in the global innovation landscape. As a result, multinationals from developed economies have increased globalizing their R&D activities and are developing a model of open innovation to acquire innovations from outside the firm including from developing economies. Substantial growth in R&D investments has been witnessed in the developing economies of Asia such as India, China and South Korea (Li & Kozhikode, 2009).

Four factors of shifting of the global innovation landscape

The first is changing requirements of Multinational Enterprises (MNEs). This implies that the need of adapting to existing technological capabilities to the local markets and the need of sourcing innovative capabilities globally make it important for MNEs to be flexible. Second, there is a growing pool of talent in developing economies. This wealth of talent is available at lesser costs compared to what it would cost in developed economies, and since salaries are a major component of R&D, costs availability of a skilled workforce at a lesser cost cannot be ignored. Third, policies of the host government are also attractive for R&D investment. Fourth, pharmaceutical companies in developing economies are also becoming more technologically competent which makes them successful in attracting global R&D (Li & Kozhikode, 2009).

Cancer treatmant

Cancer drugs continue to be manufactured across the globe by these pharmaceutical companies just like any other drugs. Due to heavy investments by all the stakeholders in the industry, drugs have been developed to alleviate the suffering of patients. However, the price tags on these drugs remains restrictive and only few individuals can afford them. For example, the price for a colon cancer drug Avastin which prolongs a patient’s life by five months is $46,000 a year. With projections suggesting increased demand for cancer drugs, in 2006 it was expected that cancer drugs would be the fastest growing class of pharmaceuticals in the world with sales exceeding $37 billion (Armstrong et al., 2007).

It is through this that advocacy groups such as NGOs, charities and even hospitals step in to provide cancer awareness campaigns and in the process, help to raise funds for cancer research and treatment. NGOs and charities have long had associations and partnerships with corporate sponsors. In Canada, for instance, the Canadian Cancer Society is in a partnership with Pratt & Whitney (aircraft turbines), General Motors of Canada, Alcan (aluminium smelters), and PetroCanada. Other partners with these corporate bodies also profit handsomely from cancer treatments including many of the major pharmaceutical companies such as Pfizer and Novartis (Armstrong et al., 2007). Most corporate bodies prefer working with NGOs because it is such advocacy groups that have the true picture of what is on the ground and the money contributed is always likely to be channeled for the purpose which it was intended. With funding from these corporate sponsors, pharmaceutical companies are, therefore, able to undertake R&D extensively.

The awareness raised by these advocacy groups has enlightened many people, both people with cancer and without. Information has made many aware of what cancer is, what its causes are and the different preventive measures available. For instance, the campaign by these groups to adopt healthy habits is bound to increase awareness on what people can do to personally reduce the risk of cancer. For instance, an article in the New York Times in 2005 by Gina Kolata showed evidence from at least 50 studies that keeping physically fit through regular exercise can actually prevent colon cancer. Other healthy habits include moderate consumption of alcohol and practicing safe sex as well as cycling, jogging or walking instead of driving often (Armstrong et al., 2007).

Recent developments have seen players in the industry explore different avenues. With biology becoming digitalized, the possibility of change is massive. Hence it is hoped that open access will make it easier to publish protocols and tools, share ideas, communicate best practices, eliminate bad designs, and verify results. Building individual medicine on such foundations will enable manufacturers to be more successful and lower their risks.   

Unless players in the pharmaceutical industry adopt openness and transparency where sharing of information is paramount, reducing the costs of manufacturing cancer treatment cures may not be realized. There is a need to ensure a cheaper, better and faster development of drugs to save on costs for both the industry and patients. Inability to share information and lack of transparency continue to hold back this industry unlike in the IT industry which has seen a tremendous growth and success through this. Fast changing technology like synthetic biology, a powerful new genetic engineering technology which is founded on DNA synthesis, amounts to writing software for cells. Synthetic biology reduces bioengineering costs by several orders of magnitude. Pharmaceutical companies considered developing individualized medicine, one product sold only to one person. Individualized drugs will lower the drug development costs across the industry. Only small scale manufacturing capability is required; with simplified lab testing, large phase trials are unnecessary and clinical trials focus on one person. There is no ambiguity on who is to be treated and every patient can be profiled. This saves on money and development time. It is time to try the open source drug development technique in the quest for cancer cures (Hessel, 2010).

According to Harpal Kumar, the CEO of Cancer Research UK, through The Guardian Magazine, the issue at the present time, is that it costs $1Bn to obtain a medicine to market and more than 15 years. This is the excuse for the pharmaceutical industry setting costly prices. If conversely, whenever you reach phase 2, you recognize specifically which patients it is going to take effect on. You would only expose those patients to, and instead of a 9% response rate, you acquire 79% response average. Kumar also states that one gets a license on the foundation of the information, and does not have to undergo phase 3. That saves ample amount of cash and years of expansion. If that process works dexterously, the entire scope of the business platform of the pharmaceutical industry changes. The notion behind the announcement of the CRUK is that we expand more targeted medicines to a lesser number of patients, thus bringing about higher positive response rates.

However, the reality may vary according to such reasons:

  • Further translational study, bio-indicator, and companion diagnostics will be a requisite.
  • The target research and development are costly.
  • Despite low cost clinical expansion with less wide range trials, phase 2 trials will jump, and the group of patients obtainable for commercialization is currently much lesser.

Help in cancer treatmant

In the meantime, cancer patients need refuge to shield them from challenges they face in treating cancer. Governments can provide the much needed respite by paying part of the medical bills for cancer patients. Medical insurance is also one way of helping patients out of this dire situation. Pharmaceutical companies could also improvise ways of making drugs easily accessible to patients. In China, for instance, there is public health insurance for cancer patients providing coverage on several levels depending on the expected cost burden and severity. Shanghai has a co-pay of 8-15% of the treatment cost covered and those with urban residence must pay 30-50% co-pay. Other regions across China have similar cancer treatment coverage with co-pay six times the patient’s annual salary or disposable income (Hicks et al., 2011).

From a personal view point, research on pharmaceuticals for cancer cures needs more concerted efforts especially from governments. Individual scientists should come together on an international platform to share ideas to hasten the development of better yet more affordable cancer drugs. Crucial information that could have long had a major impact on the search for the treatment is kept in secret. The quicker the industry players realize the importance of sharing information, the quicker it is going to be to develop better reliable cancer treatment drugs, as the bottom line of all this is cancer remains a killer disease on a large scale.


The ultimate solution to cancer lies in finding the treatment at lower manufacturing costs to the pharmaceutical companies, hence relatively low priced drugs. This is possible through better innovative structures in drug development and more emphasis on R&D. This may eventually lead to better ways of manufacturing cancer drugs with less and less investment over time like the developing of individual medicine. This may result in affordable cancer drugs and thus reduce the enormous suffering of people from cancer. Deaths caused by cancer will also be greatly reduced, and the unnecessary loss of loved ones due to cancer may be avoided.

Here You Can Get a Price Quote