Some of these estimates also take into account the opportunity cost of investing capital many years before revenues are realized (see Time-value of money). Because of the very long time needed for discovery, development, and approval of pharmaceuticals, these costs can accumulate to nearly half the total expense. A direct consequence within the pharmaceutical industry value chain is that major pharmaceutical multinationals tend to increasingly outsource risks related to fundamental research, which somewhat reshapes the industry ecosystem with biotechnology companies playing an increasingly important role, and overall strategies being redefined accordingly. Some approved drugs, such as those based on re-formulation of an existing active ingredient (also referred to as Line-extensions) are much less expensive to develop. COUNT 8
QSN1 What drugs are the least expensive to develop? ANS1 those based on re-formulation of an existing active ingredient QSN2 What accounts for nearly half of the costs to develop drugs? ANS2 opportunity cost of investing capital QSN3 What is the consequence in the value chain? ANS3 increasingly outsource risks related to fundamental research QSN4 What happens when companies outsource? ANS4 somewhat reshapes the industry ecosystem with biotechnology companies QSN5 What is re-formulations of active ingredients referred to? ANS5 Line-extensions QSN6 Investing capital can increase drug development costs by how much? ANS6 nearly half the total expense QSN7 What kind of companies have had a more important role in drug development? ANS7 biotechnology QSN8 What firms tend to outsource drug development? ANS8 major pharmaceutical multinationals