Big Pharma’s Return on Investment Plummets to a Dismal 10-Year Low

This is the web version of Brainstorm Health Daily, Fortune’s daily newsletter on the top health care news. To get it delivered daily to your in-box, sign up here.

Good afternoon, readers.

I know we’re all supposed to be cheery going into the holidays, but I have some bad news: Legacy biopharma companies are still in a rut.

Or at least that’s what the experts over at Deloitte have to say in a new report finding that, for the top 12 biopharma companies, the return on investment for R&D has fallen to a dismal 1.8%.

That’s a decade-long low, and somehow even lower than last year’s 1.9% ROI (for comparison, the number stood at 10.1% in 2010).

The reasons are plentiful. Among them: A tougher regulatory environment and an ever-shifting R&D picture which now favors smaller, leaner firms over the giants of old. And even within that narrative, things are complicated, according to Deloitte’s Neil Lesser.

“The current model is not a sustainable one for success,” Lesser told Fortune in an interview.

But there are some plus points, too.

“Companies continue to see a lot of success with individualized and personalized medications,” said Lesser, adding that the model “hasn’t reached the volumes that the blockbuster model of multi-billion dollar drugs was based on.”

This ROI plummet may help explain, as we’ve previously explored, major drug companies’ insistence on hiking prices and engaging in expensive bolt-on acquisitions.

Read on for the day’s news.

Sy Mukherjee


Medtronic nabs wearable startup Klue. Medical technology giant Medtronic is adding yet another digital health startup to its roster—Klue, which uses wearable technology in order to suss out certain gestures and behavioral health metrics, according to MobiHealthNews. This is meant to add to Medtronic's portfolio of products for diabetes management by examining and analyzing their eating habits. (MobiHealthNews)


FTC challenges Illumina's DNA deal. Shortly after clearing Roche's long-delayed acquisition of Spark Therapeutics, the FTC threw a buzzsaw into genomic sequencing giant Illumina's $1.2 billion quest to acquire PacBio, a rival DNA sequencing firm. Illumina strongly disagreed with the decision, which was based on monopoly concerns. (FierceBiotech)


Unwrapping Christmas With Behavioral Economistsby Shannon Fitzgerald

Retailers Gave You Free Returns and You Ruined Itby Bloomberg

3 Signs You Won't Be Getting Promoted Anytime Soonby Anne Fisher

Sign up for other Fortune newsletters.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.

Read More

CEO DailyCFO DailyBroadsheetData SheetTerm Sheet