ANALYSIS OF NRDO (NO RESEARCH, DEVELOPMENT ONLY) MODEL FOR THE NEW DRUG DEVELOPMENT OF TAIWAN PHARMACEUTICAL INDUSTRY
Date Issued
2006
Date
2006
Author(s)
Chung, Yu-Min
DOI
zh-TW
Abstract
New drug development has become an expensive and high-risk investment. A new business model, NRDO (no research, development only), has evolved in recent years to address this problem. Biopharmaceutical industry in Taiwan has also started to adapt the NRDO model. While there have been numerous successful cases in US with this model, it may not guarantee the same success in Taiwan, because the economic parameters are very different locally.
Through the simulation of risk-adjusted net present value (rNPV), the results indicate that in most of the cases, Taiwan market alone can not support the expected financial returns of the clinical research of NRDO model. However, the analysis also shows that in-licensing late stage products results in much better rNPV than early stage products. And for late stage products, reducing subject number in clinical trials can have big impact on rNPV, which is not so obvious for early stage products. When in-license late stage products, obtaining manufacturing rights can also improve rNPV greatly.
Conventional wisdom suggests that extension of product life-cycle beyond the patent expiration can increase the product value significantly. However, our rNPV simulation shows a very different result. The product life-cycle extension has very limited impact on the rNPV.
The in-licensing negotiation to expand the market territories can be a solution to the limited market size of Taiwan. Both parallel and integrated development of in-licensed products in Taiwan plus another country such as China or Korea, can give a much better return for the investment.
Lack of capable industry complementors, such as CROs and CMOs, is a critical issue that need to be addressed for NRDO model. Government should give more incentives and create an executable policy to build up better infrastructure for the biopharmaceutical industry.
Subjects
NRDO
rNPV
生技製藥研發
產品授權
商業模型
risk-adjusted net present value
in-license
business model
pharmaceutical R&D
Type
other
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