The human genome has complicated the research process

But five years later, only one in five drugs discovered are blockbusters - achieving more than $300m in annual sales. And discovery timelines have only been cut by 20%.

The scrutiny of research processes comes as a number of pharmaceutical giants, including the newly merged GlaxoSmithKline, report their first quarter results, in the midst of a global economic slowdown.

Cost of research

Generally, the industry is facing pressure to cut the cost of prescription drugs.

As the cost of healthcare escalates, governments are keen to restrict drug use and reduce the cost for national health budgets.

However, growing concerns about drug safety have also made the development of new drugs more expensive.

Companies such as GlaxoSmithKline are the result of mergers forged to cut costs and stay ahead in a increasingly competitive industry.

Nevertheless, many of the big players continue to turn a handsome profit. GlaxoSmithKline has reported a 11% rise in its profits.

The company's first quarter results have been buoyed by new diabetes medicine Avandia and drugs for asthma, depression and infections. These strong results make a fresh merger unlikely, said chief executive Jean-Pierre Garnier.

Alliances

Ann Baker, a partner in the pharmaceuticals practice at Accenture, places a premium on alliances that make research more efficient through the sharing of information.

"Historically alliances have been troublesome," she said.

Historically alliances have been troublesome

Ann Baker Accenture

About $10bn is lost through poor management of alliances, according to estimates by Accenture.

The number of alliances in the industry is actually on the decrease, but the value derived from alliances is not falling as fast - a sign that companies are getting better at managing such ventures.

Accenture interviewed more than 200 executives from 15 pharmaceutical and biotechnology companies for its report.

Stunted productivity

Accenture's Ms Baker says this week's company results will generally show that most companies "are making great strides", but she identifies several factors that are still holding drug companies back.

She summarises these as:

• Rapid changes in genetic research and technology, which have complicated the process of sifting through data in the search for new drugs.
• The industry has got more competitive. Whereas biotech companies used to be suppliers to the pharmaceutical industry, they are now becoming more competitive.
• Companies have less money to spend on research.

Bigger is not better

But, Ms Baker says that the amount spent on research bears little relation to increases in productivity.

(US-based firms only)

Spending on drug research and development has jumped 100% since 1980, but this has not been matched by a similar improvement in productivity.

The wave of mergers that has engulfed the industry is not the answer either - from a research point of view.

"Bigger is not better - it's what you do with it," she says. "The answer is not necessarily to keep on merging."

Room for improvement

With the discovery of the human genome, many companies are pinning their hopes on this new technology to unravel the genetic basis of many diseases.

Genetic data is taking a long time to make sense of

Ann Baker Accenture

However, Ms Baker warns companies not to become disillusioned by the slow application of work on the human genome.

"In 1997 it was going to deliver huge numbers of drugs, but genetic data is taking a long time to make sense of," she says. "It could take another five years."

However, she stresses that companies need to integrate genetic research into standard research, even though there is "no quick payback".

Genetic research will herald dramatic developments in medicine, allowing it to be more tailored to individuals, she says.