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Why Products Fail in Phase III

Executive Summary

Half of the small-molecule drugs that fail pivotal trials can't prove better efficacy than placebos. The most important predictor of failure: a drug with a novel mechanism of action. But for the most part, companies are pursuing a one-size-fits-all development strategy, using the same methods for developing drugs that modulate novel and precedented targets. Companies need to better differentiate their development strategies based on risk.

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Making Licensing Pay

Does in-licensing improve attrition rates? It hasn't reversed the R&D productivity decline-in part because while in-licensed candidates are less risky than internally invented ones, they generate lower average revenues. But companies can do better: we show statistically that they need to place more emphasis on licensing products early. Moreover, to be successful at early-stage licensing, drug firms need focus, not on specific therapeutic areas, but on specific biological mechanisms.

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