BIOTECHNOLOGY DEVELOPMENT COSTS TOP $1.2 BILLION PER PRODUCT

The average cost of developing a new therapeutic biotechnology product is more than $1.2 billion, including the costs of drugs that fail in testing and the time associated with bringing these products to market, according to a new study by the Tufts Center for the Study of Drug Development.

The study's authors defined a biotechnology product as "any therapeutic biological compound, including recombinant proteins, monoclonal and polyclonal antibodies, antisense oligonucleotides, therapeutic genes and recombinant and DNA vaccines," as distinguished from "traditional" pharmaceuticals.

The $1.2 billion figure includes an average out-of-pocket cash cost of $198 million for preclinical development, which rises to $615 million when fully capitalized, and an average out-of-pocket cash cost of $361 million for clinical development, which rises to $626 million when fully capitalized.

Capitalization increases biopharmaceutical costs relative to traditional pharmaceutical costs because of a longer development timeline and a higher cost of capital, the study found. A new biotech product takes 97.7 months on average to make its way through clinical development and regulatory review, about 8 percent longer than for traditional pharmaceuticals. On the other hand, biopharmaceuticals have an overall clinical approval success rate of 30.2 percent, as opposed to 21.5 percent for traditional drug pipelines.