How to Reduce Costs and Increase Efficiency in Drug Development

The pharmaceutical industry has evolved significantly in the past 40 years. Relatively recent drug developments have seen advancements in cancer treatments, vaccines, antibiotics and more.

Such clinical developments have had remarkable impacts on the lives of patients. Though to achieve this, development drugs require huge levels of financial investment.

A new drug takes an average of 12 to 15 years to develop and reach the final approval stages, requiring significant funding across the full period of development.

According to the EFPIA, only 1 out of 10,000 identified molecules in preclinical stages make it to the final FDA approval stages, where the drug becomes available for market use. This highlights the importance of reducing costs in drug development, since not every investment may make it to final market approval.

Additionally, drug development research is becoming increasingly complex. Understandings of diseases and treatments have advanced, increasing the scope for more targeted and advanced therapies – which in turn, can be more costly to develop.

There are steps that can be taken to reduce the cost of drug development, and key considerations in clinical trial project management. This guide outlines a range of ways that the pharmaceutical industry can minimise drug development costs, and increase efficiencies.

Drug development cost statistics

According to EvaluatePharma (9th edition), global pharma costs are increasing. Here’s an overview of pharmaceutical industry costs: 

  • R&D costs increased by 6% year-on-year from 2020 to 2021, going from $198 billion to $212 billion.
  • Overall R&D costs are expected to increase by a further 3.5% year on year by the end of 2022, amounting to an estimated $226 billion.


Outsourcing has become an increasingly important cost-reduction strategy in drug development over the past 10 years. Pharmaceutical companies look to outsource less critical elements of the R&D process in order to save costs. This could include areas such as non-critical IT and administrative processes.

As with any industry, outsourcing processes to an area where labour costs are cheaper can result in significant savings.

Though, it is important to note that outsourcing certain processes can be critical to the success of drug development. Parts of the R&D process carry significant risks and challenges that would be more appropriately managed in-house by the pharmaceutical company or an experienced CRO

It is recommended that companies only outsource parts of the research and development process, keeping the most innovative processes at home.

Lab as a Service (LaaS)

One innovative way that CROs and pharmaceutical companies are improving cost efficiency is through Lab as a Service (LaaS). Partnering with a LaaS provider means that pharmaceutical companies can rely on scientists and technical staff, as well as instrumentation, equipment and processes to achieve predefined outcomes.

CROs that offer central laboratory services also benefit by having an additional revenue stream, utilising personnel, equipment and laboratory space to support the clinical development needs of partner companies.

Reduce risks of failure

Minimising the risk of failure is another way that pharmaceutical companies and CROs are reducing the cost of drug development. Risk management strategies involve identifying areas where potential issues may occur across each phase of the research.

There are three main phases of clinical trials: phase I, II, and III. As the study progresses throughout each stage, more time and money is spent on the research and development of the new drug.

Drug failure in phase 3 research can be particularly impactful on costs, making it important to have risk mitigation strategies in place for later stages in the research. One of the most common drivers of failure in phase 3 research is flawed clinical trial design.

It is imperative that the trial is designed to save time and costs, ensuring:

  • Effective communication between investigators, patients and sponsors
  • Effective regulatory approval processes
  • Sufficient and timely safety and efficacy insights
  • Secondary research objectives

Simbec-Orion commonly works with pharmaceutical companies on phase 3 trial designs. Our goal is to foresee potential challenges – based on the product, patient group and our industry experience – in order to plan a flexible and reactive strategy. 

By managing risk, we reduce barriers to success and control costs. Find out more about our phase 3 services.

Efficient patient engagement strategies

Patients are at the heart of drug development and clinical research. Without trial participants, the research cannot exist.

With the right patient engagement strategies, clinical trials can optimise costs by improving trial awareness, patient recruitment and patient retention. All of which, when successful, help trials run more efficiently. 

Patient recruitment and retention issues can prolong the study, making it more costly. Studies find that around 30% of patients drop out of clinical trials, which results in significant financial impacts. 

This emphasises the importance of effective patient engagement strategies when considering how to reduce the cost of drug development.

Decentralised clinical trials

Another way that CROs and pharmaceutical companies are reducing high drug development costs is through hybrid or decentralised clinical trials. 

Decentralised clinical trials reduce the need for clinic visits during the clinical trial process, minimising the costs associated with finding, running and travelling to clinics.

As well as reducing running costs, decentralised trials offer patients more flexibility, allowing people to take part from the comfort of their own homes with less disruption to day-to-day activities. This can indirectly improve costs and efficiency, since decentralised trials have the potential to improve patient recruitment and retention. 

Decentralised clinical trials favour a more patient-centric approach, whereby the usual participation barriers, such as attending the clinic, are reduced. Instead, decentralised trial designs are driven by different regulatory communication and data integration technologies.

These clinical trial designs can be particularly beneficial in cases where patients suffer from debilitating symptoms that limit travel, as is the case for several rare disease and oncology studies.

In a poll by EY-Parthenon, 50% of sponsor pharmaceutical companies estimated that clinical trials will be almost entirely decentralised or hybrid by 2024.

Artificial Intelligence (AI)

The role of artificial intelligence (AI) has increased in various areas of drug development, from initial discovery, to diagnosis and treatment. AI and machine learning can be used in drug development to speed up parts of the research process, helping reduce costs and improve efficiency.

Research finds that AI can minimise the time taken to screen new drugs by as much as 40 to 50%, reducing the costs associated with this part of the process. AI software has been shown to increase patient adherence rates (measuring the extent to which patients comply with study requirements) by as much as 25% during phase II research – helping trials run more efficiently.

AI has major potential to improve the ways that studies are run, reducing the time spent on repetitive processes and the R&D costs associated with them. Furthermore, deep learning AI tools can be applied to modelling studies, assisting with the safety and efficacy evaluations of drug molecules. 

In 2021, the global healthcare artificial intelligence market was estimated at $10.4 billion, and is expected to increase to $15.4 billion by the end of 2022.

Develop industry partnerships

Strategic partnership with external pharmaceutical companies is one way that organisations are reducing the costs of drug development. Partnerships can help improve operations and streamline processes in ways that one company working alone could not.

By eliminating the inefficiencies that increase research and development costs, partnering companies can improve the way clinical trials are run.  

For example, Simbec-Orion partnered with ImmuPharma to complete phase 3 research into Lupuzor™, a treatment for Lupus. The main aim of such partnerships is to share research solutions that will speed up and improve the delivery of the clinical trial process.

Full-service CRO support

At Simbec-Orion, we take an agile and flexible approach to clinical trial management. We understand the importance of clinical trial design, optimised for cost-effective delivery. Get in touch with our experts to find out more, or explore our CRO services.

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