How the development phase, segment of supply chain and monetary value of materials used in production, factor in the assessment.
Did you know that the United States imported more than one trillion US dollars of pharmaceuticals over the course of eight years between 2016 and 20231? And here is another interesting fact: only 60% of these imports were packaged medicaments2, readily available to patients. The rest of the imports, valued at over $400 billion, were in the form of precursors to packaged medicaments, such as active ingredients, starting materials, bulk drug products, product intermediates, and packaged but not labeled therapeutics.
The numbers I shared are based on the commercial value of imported pharmaceuticals. While the value of marketed drugs can be readily derived, the same cannot be said about the Investigational New Drugs used in clinical trials. The commercial valuation of clinical supply is often not obvious.
Here is an example. Let’s say we were tasked to supply clinical trial material for an ongoing phase 1 study in the United States. We engaged a European drug substance manufacturer to develop processes and controls and to produce 2 kg of drug substance which would be shipped to the United Stated where a domestic manufacturer would formulate it into a drug product and distribute to clinical sites. The total value of development and manufacturing contract with the European supplier was in the amount of $2 million. It included development of multiple-step processes and controls, validation of analytical methods, production of demonstration and GMP batches, and related stability studies. Once the drug substance was ready to be shipped, the shipping documents were prepared and, among other information, included destination address, chemical name, reference to FDA’s Investigational New Drug application, Harmonized Tariffs Code, quantity and commercial value.
So, what is the value of 2 kg of drug substance? Should it be $2 million, that is, the total amount of development and manufacturing contract? But what if drug substance was produced in a single chemical transformation from readily available and inexpensive precursors? Surely, in such instance the total value of development and manufacturing contract would be just a fraction of $2 million. Hence, when assessing manufacturing contribution to the value of clinical trial material, i.e. packaged and labeled drug product or its precursor, such as drug substance, the cost of process and controls development, analytical methods validation, stability studies should not be part of valuation. Only monetary value of materials used in production should be included in valuation assessment. Vendor’s quotation or statement of work often itemizes all the above and is the best document to identify such materials cost, which is the starting point for value assessment.
There are two additional factors that need to be considered when assessing the value of clinical supply: development phase and segment of supply chain.
Let’s consider the probability of marketing application approval for a drug in clinical development. In 2021, BIO, Pharma Intelligence and QLS published an article3 highlighting the clinical development trends from 2011 to 2020. The article summarized marketing application approval probabilities for all drug modalities in all clinical development phases. As expected, the probability of approval increases from phase to phase. However, new molecular entity drugs, even in phase 3, had less 50% chance of approval. Hence, the numeric value of probability of marketing application approval should be part of the commercial value calculation for clinical trial material and it should increase as development advances through stages.
| Likelihood of Approval3 | Phase 1 to Approval | Phase 2 to Approval | Phase 3 to Approval | NDA/BLA to Approval |
| New Molecular Entity | 5.7% | 11.2% | 43.6% | 86.1% |
| Biologic | 9.1% | 17.4% | 53.6% | 94.6% |
Lastly, segments of pharmaceutical supply chain should be considered in value calculation. The example discussed earlier involved international shipment of drug substance, which is not a clinical trial material, yet: it is not used as a packaged and labeled drug product that is given to patients. Drug substance is a half-way point in a pharmaceutical supply chain, which evolves from the most upstream segment, the starting materials, to the drug substance and/or product intermediate, for example, amorphous spray dried dispersion, to the most downstream segment, which is the packaged and labeled drug product. Hence, when calculating the commercial value of the material shipped, the segment of supply chain should be a factor, increasing downstream of the supply chain, with packaged and labeled product equal to 1.
In 2025, there were 159,000 clinical trials4 in the US for the top five causes of death by diseases5. Undoubtedly, numerous clinical trial materials and their precursors were shipped to the US to support these studies. Commercial valuation of clinical supply should be on every sponsor’s radar, and it could be assessed based on the development phase, segment of supply chain and monetary value of materials used in production.
References:
1 $170B USD in 2023, $166B USD in 2022, $145B USD in 2021, $137B USD in 2020, $125B USD in 2019, $114B USD in 2018, $97B USD in 2017, $91.7B USD in 2016. Total $1,045.7B during 2016-2023. Source: Observatory of Economic Complexity. oec.world/en
2 $82.7B USD in 2023, $92.7B USD in 2022, $83.3B USD in 2021, $82B USD in 2020, $78.5B USD in 2019, $70.3B USD in 2018, $65B USD in 2017, $66.7B USD in 2016. Total $621.2B during 2016-2023. Source: Observatory of Economic Complexity. oec.world/en
3 “Clinical Development Success Rates and Contributing Factors 2011-2020”. p. 15. BIO, PharmaIntelligence Informa, QLS.
4 Clincial.Trials.gov, September 2025. 31,233 studies for heart diseases, 113,797 studies for cancer, 10,006 studies for stroke, 60 studies for chronic lower respiratory disease, 3,899 studies for Alzheimer’s disease.
5 Leading causes of death by diseases: heart disease, cancer, stroke, chronic lower respiratory, Alzheimer’s. Centers for Disease Control and Prevention.
Val has two decades of experience in pharmaceuticals manufacturing processes and controls development, creation of robust CMC strategies and execution plans, establishing global manufacturing networks to ensure continuity of clinical supply and capture regulatory milestones to enable successful marketing applications, and helping companies to transition from development into commercialization. Val has extensive experience in fast track, orphan and breakthrough therapy designated accelerated drug development. Val has been part of the teams that commercialized three drugs Incivek by Vertex, Zerbaxa by Cubist/Merck, Vafseo by Akebia, and he has overseen multiple commercial process validations, prepared marketing applications and interacted with FDA and other health authorities.