Allergan's expenditure on R&D 2013-2019

Allergan invested approximately 1.8 billion U.S. dollars into the research and development (R&D) of products in 2019. Expenditure was a 20 percent decrease versus the prior year, which was primarily due to a significant reduction in license and milestone fees.

The costs, risks, and rewards of drug development

The number of drugs in the worldwide R&D pipeline was expected to exceed 17,700 in 2020. The development process is fraught with difficulty, and there is a strong chance that funds invested will not generate financial returns. Only two-thirds of new drugs successfully pass the first clinical phase, and the probability of a drug progressing from phase one to full approval is less than ten percent. Allergan invested more than eleven billion U.S. dollars between 2015 and 2019, resulting in company revenues of approximately 75 billion U.S. dollars during that period.

How can companies conquer the competition?

Creating groundbreaking treatments through R&D is one way of maintaining a company’s status as a leading pharmaceutical brand, but another growth strategy is to increase market share through mergers and acquisitions. In May 2020, AbbVie completed the acquisition of Allergan in a cash and stock transaction valued at approximately 63 billion U.S. dollars. The agreement creates the opportunity to combine finances, increasing R&D investment in the race to develop the next blockbuster drug.