McKinsey and KPMG have published reports highlighting the shrinking return on investment from R&D in the pharmaceutical sector. Between 1999 and 2010 R&D in US pharma companies doubled (from 25 bn $ to 50 bn) but the number of market applications did not rise. Since 2007 it is in decline. The NZZ has the following graph to illustrate:
Big Pharma is under pressure from investors to show its worth ("return on research spending", this has nearly halved from 1990 to 2010). Voices are heard which recommend the strategy adopted by car manufacturers of concentrating on marketing and sales, leaving innovation to others.
This could indicate they follow a similar path taken by oil companies BP and Shell who disinvested in renewable energy. Similarly, the investors' pressure to focus on profitable operations (fossil fuels in this case) has played a decisive role. The question is: what could be learned from these developments?
Should renewable energy companies focus on marketing and sales? If I understand the potential strategy of Big Pharma correctly, they would charge a much higher price on their premium brands (which deliver the same effect as the generic alternative). Or the car companies which sell a car that costs 10 times as much as a simple car, yet in terms of functionality also gets you from A to B. Can we imagine a market in which renewable energy is marketed in a similar way?