Today's R&D Reality
The High Cost of Life Science Failure
These failures translate to billions in lost investment and delayed patient access to life-saving therapies.
The Cost of Failure
Failing costs a lot.
The Cost of Failure
Per Drug Failure
- Average Cost of Developing a New Drug: $1.5–$2.6 billion (includes cost of failures across portfolio).
- Cost of a Failed Phase:
- Preclinical failure: $10M–$30M
- Phase I failure: $15M–$50M
- Phase II failure: $50M–$150M
- Phase III failure: $200M–$1B+
- Preclinical failure: $10M–$30M
- Opportunity cost: Lost potential revenue from future sales (often projected in billions).
Company-Wide Effects
- Stock Devaluation: Public biotech firms can lose 30–80% of their market cap after a late-stage failure.
- Investor Losses: VC and institutional investors may see reduced returns or complete losses on biotech portfolios.
Business and Strategic Impact
- Pipeline Disruption: A failed candidate may leave a gap in the company’s portfolio, affecting future revenues and strategic positioning.
- Partnership Fallout: Failures can strain or dissolve partnerships with pharma, CROs, CDMOs, or academic collaborators.
- M&A Consequences: Failed assets lower a company's valuation and may deter acquisition interest or licensing opportunities.
Scientific and Strategic Costs
- Loss of Platform Credibility: A failed asset may call into question the validity of an entire platform (e.g., RNAi, CAR-T variant, bispecific antibody).
- Pipeline Setback: Companies may be left without a lead asset, delaying progress by 5–10 years.
- Abandonment of Modality or Target Class: Repeated failures can lead to industry-wide retreat from high-risk/high-reward areas.
Patient and Societal Costs
- Delayed Therapies: Patients may lose access to potentially life-changing or life-saving treatments.
- Erosion of Hope: Especially in rare diseases or oncology, where therapeutic options are limited.
- Increased Healthcare Burden: Lack of innovation may lead to continued reliance on outdated, less effective treatments.
Organizational Costs
- Layoffs and Downsizing: Particularly for small biotechs dependent on one or two assets.
- Reputation Damage: Harder to attract partners, investors, and top talent after failure.
- Internal Disruption: Low morale and turnover among scientific, clinical, and commercial teams.
Policy and Regulatory Costs
- More Conservative Regulatory Climate: Especially if failures involve safety issues or accelerated approval pathways.
- Wasted Public Funds: If supported by grants, tax credits, or government partnerships.