Product development and especially drug development is a complicated, highly regulated and expensive process. In 2003, DiMasi et al., published a paper estimating that the cost for developing a new drug is $800m (https://doi.org/10.1016/S0167-6296(02)00126-1). In 2010, Paul et al. in the paper entitled "How to improve R&D productivity: the pharmaceutical industry’s grand challenge", concluded that many new and novel molecules are being developed by smaller biotech companies and estimated that the cost of bringing a new molecule to the market costs $1.8bn (https://doi.org/10.1038/nrd3078).
In our view, the real cost of developing a drug should not include the cost of other drugs failures but be the total of the spend of the development costs of the particular drug.
The point which is very valid however is that a biotech company (i.e. not a multinational pharma company) must carefully and cleverly plan the development to the next inflection point, which does not necessarily have be the final approval, but the point in time when a drug can be licensed to a pharma company for further development.
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