A Revolution in R&D

Foreword
To meet growth targets, pharmaceutical companies are going to have to increase R&D productivity. By a fortunate
coincidence, that crisis in expectation is being counterbalanced by a surge of opportunity. Recent
years have seen astonishing advances in technology and explosions of data, which are driving two waves of
change through the industry—a genomics wave and a genetics wave—and radically reshaping R&D methods
and economics in the process. Biopharmaceutical R&D is moving into a new era: almost every link in the
value chain has the potential for tremendous boosts in efficiency or success.
But these advances are not assured. Technological hurdles have yet to be overcome, particularly in the genetics
wave. Moreover, because the productivity boosts are likely to be unequal and uncoordinated, the value
chain itself will demand reconfiguring. And so too, in consequence, will many traditional operational procedures
and organizational structures. The repercussions of genomics, in other words, are going to reach the
furthest recesses of corporate constitution and culture. A true revolution, in short—and one that is already
well under way.
BCG has evaluated deeply the economic and business implications of these disruptions. To bolster our internal
understanding, we gathered information and perspectives in an extensive program of interviews with
leading R&D scientists and executives. Our findings—based on the combination of these interviews, economic
modeling, and client casework—form the substance of this report. Its three sections are devoted
respectively to the impact of genomics, the impact of genetics, and some of the strategic and operational
implications for biopharmaceutical firms.
The first two sections have already been published separately. They generated considerable publicity, and—
more important—considerable comment. We now look forward to your further responses to the report as a
whole.
Philippe Guy
Senior Vice President
5