All You Need to Know About Pharmaceutical Product Development

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New product development (or NPD) in the pharmaceutical industry can be a complex and difficult process. Statistics show that the R&D budget allocated for developing new drugs is five times higher than other industries. Despite the high costs, only three out of ten marketed drugs drive any significant revenue to the business.

This uncertainty can limit pharmaceutical companies from creating new products, but new pharmaceutical products are required to effectively prevent, diagnose, and treat diseases. An effective pharmaceutical product development process can aid in the process of creating drugs that are more likely to drive significant revenue.

In this article, we’ll discuss the pharmaceutical product development process and its stages.

What is Pharmaceutical Product Development?

Pharmaceutical product development is the process of manufacturing and developing new drugs. It plays an important role in innovating and developing drugs to fight off new diseases and manage/treat known medical conditions.

The product development process in the pharmaceutical industry isn’t the same as product development in any other industry. Due to their highly specialized nature, pharmaceutical products need to pass through an extensive regulatory process with frequent testing before they are released to the market.

That’s why developing new pharmaceutical products can cost a lot of time and money making it vital to have a proper pharmaceutical product development process in place.

5 Stages of the Pharmaceutical Product Development Process

This pharmaceutical product development process can be divided into the following five stages:

  • Discovery & Development
  • Preclinical Research
  • Clinical Research
  • Review & Approval
  • Commercialization

Below, we look at these in more detail.

  1. Discovery & Development

Before developing a drug, the development process starts with understanding the existing problem. This is then broken down into two stages: drug discovery and drug development.

Drug Discovery

In the initial stage of the process, employees get together to gather information about the medical condition in question. 

Researchers can then look for solutions to the stated problem by discovering new drugs in various ways. Here are a few examples:

  • Basic knowledge and research in chemistry, biochemistry, biology, and physiology can offer some common solutions to illnesses that may be similar to the target condition.
  • Reverse-engineering the development of the disease to create a product that may prevent its root cause.
  • Screening chemicals and molecular compounds to find a chemical structure that may offer beneficial effects against the disease.
  • Isolating chemicals from natural products like herbal plants or animals and then conducting drug screening to test their effectiveness.
  • Analyzing existing treatment options for the disease which may have unexpected side effects.
  • Using new technologies to target specific parts of the internal and external body to find relevant treatment/prevention options

Discovering new drugs can take a lot of trial and error before eventually settling on a handful of possible solutions. It took Paul Ehrlich, a German pioneer in medical science and Nobel prize winner, a few years to test 606 chemicals to achieve a cure for syphilis. Once the drug, called Salvarsan, was released in the market, it was an immediate success and made syphilis a curable disease.

Drug Development

After discovering a range of candidates for fighting or preventing an illness or disease, the most promising ones are selected for further development. The goal of the drug development stage is to find a drug that has the desired efficacy and is safe to use. 

The drug candidate must improve the overall quality of life of the patient, while not producing negative effects that may be more harmful than the disease itself.

To develop the proposed drugs, multiple experiments are conducted to test the efficacy of the drug and gather information on:

  • Its beneficial effects and mechanism of action
  • Required dosage for effectiveness
  • The means of introducing the drug into the human body (e.g. by injecting it or taking it orally)
  • Toxicity of the drug including any adverse effects that may occur
  • Its interaction with other drugs and illnesses
  • Its effectiveness in comparison with other treatment options

Due to extensive testing in both the discovery and development stages, this phase of the pharmaceutical product development process becomes lengthy, expensive, and consists of incremental steps.

According to the latest reports, it takes an average of fifteen years with an estimated cost of $500 million to $2.6 billion to discover and develop a drug to the point of releasing it to the market.

  1. Preclinical Research

Before testing a drug on humans, researchers conduct preclinical research. The purpose of this stage is to gather information on the potential side effects and toxicity of the drug.

There are two types of preclinical research:

  • In Vitro – tests that are performed in glass tubes, containers, or plastic vessels
  • In Vivo – tests that are performed on a living organism

When performing pre-clinical research, researchers are required to adhere to good laboratory practices (GLP) that comply with FDA standards. The FDA sets standards for safety, ethicality, and regulation of drug testing.

Preclinical tests don’t last for long periods or require large sample sizes. These studies should, however, provide information on the toxicity levels of the drugs as well as the appropriate dosage. After preclinical trials, drug developers evaluate their findings to approve the drug candidate for clinical trials.

  1. Clinical Research

Although preclinical trials help in identifying the effectiveness of pharmaceutical products, they are only a stepping stone for understanding how the drug might interact with humans. Thus, clinical research is done by testing the drug on human subjects to evaluate its effects.

The clinical research stage has different sub-phases that consist of trials and tests. These phases can be categorized as follows:

  • Designing the clinical trials
  • Conducting clinical trials
  • Evaluating the results

Designing the Clinical Trials

Researchers develop a protocol and create a set of questions related to pharmaceutical products. They base these questions on previous research that may inform them about how the drug interacts with the human body.

With the documentation in place, the pharmaceutical company designs the clinical trials and decides on:

  • A selection criteria
  • Sample size
  • Length of the study
  • Control groups
  • Dosage and techniques
  • Data to collect
  • Methods for reviewing and analyzing the data

The initial phases of clinical trials are usually conducted on a small scale and are then extended to take in more participants in the later stage.

Conducting Clinical Trials

Clinical trials consist of three phases. As pharmaceutical products pass one phase, they move on to the next until testing is complete and all data has been collected and analyzed.

Typically, the sub-phases for clinical trials consist of the following:

  • Phase 1 – these trials tend to involve a small number of people (> 30). The main goal of this phase is to find a safe dosage of the drug to give participants, to determine how it should be administered, and to evaluate how the body reacts to it.
  • Phase 2 – once the treatment is found to be safe, the drug candidate is tested on people who have the condition the drug is designed to combat. These are mid-sized trials consisting of 100 or fewer people, aimed at assessing the effectiveness of the drug.
  • Phase 3 – This phase typically involves a large group where the drug is tested on hundreds or thousands of participants. The main goal of this phase is to compare the new treatment with existing treatments.

Submitting The Investigational New Drug Application

Drug developers or the organizations/individuals sponsoring the clinical trials must submit an Investigational New Drug application to the FDA to receive this agency’s approval to begin clinical trials.

In this application the pharmaceutical company must provide:

  • Preclinical research and toxicity data
  • Manufacturing information
  • Clinical protocol of the clinical trials
  • Previous human research data
  • Investigator’s information
  1. Review & Approval

The fourth stage of pharmaceutical product development is regulatory review and approval. When the pharmaceutical company has gathered all the required information for the drug and its intended use, as well as studies from preclinical and clinical trial testing, the organization may apply for approval to go to market.

The company submits the compiled data to the FDA. The FDA regulatory review and approval process consists of three main steps:

  • Submitting the New Drug Application
  • FDA Review
  • FDA Approval

Submitting the New Drug Application

The New Drug Application (NDA) provides detailed information about the drug including:

  • Labeling of the drug
  • Safety updates
  • Drug abuse information
  • Patent information
  • Previous research data conducted from outside the U.S. (if applicable)
  • Review board compliance information
  • Directions for using the drug

FDA Review

After submitting the NDA, the FDA review team may take between six and ten months to approve the application. It’s important to know that the FDA review team may conduct routine visits to clinical study sites. This ensures that the data/evidence in the NDA isn’t manipulated or fabricated in any way.

FDA Approval

After the FDA has reviewed a company’s application and determined that the newly proposed drug is safe for use, an official from the FDA would work with the company to develop the approval process. They will work with the pharma company to refine drug information such as helping it effectively label its product in a way that clearly describes how to use the drug.

Sometimes there may be some issues to address before the FDA approves a drug for the market. The FDA may ask the drug developer some questions based on the information they provided. At this point, the developer can refuse to work with the FDA, and in the case of a disagreement, a drug developer may file a formal appeal.

  1. Commercialization

This is the final stage of the pharmaceutical product development process. Commercialization refers to marketing pharmaceutical products to customers. In this stage drug developers gather and submit safety reports and other documentation. Finally, the developer releases the new drug into the market where pharmaceutical companies can start to financially profit from their efforts.

Importance of the Product Development Process in the Pharmaceutical Industry

Creating and introducing new pharmaceutical products is more risky, more costly, and entails a lengthier process than developing offerings in other industries. Due to inefficiencies in the production process and rapid business dynamics, 90% of clinical drug developments fail despite the huge amounts of money put into it.

When developing a new product it’s essential to have a proper pharmaceutical product development process to ensure a higher chance of success with your new proposed treatment.

It’s important to develop new pharmaceutical products using a tried and tested process as it’ll help you gain a competitive edge over competitors. But new drug development has a significant influence on improving the quality of life for all.

Financially, the pharmaceutical industry also promises huge profits in sales which are estimated to reach a total worth of $1.42 trillion in 2021. In 2001, the pharmaceutical industry was worth just 390 billion: that’s 218% growth over the past twenty years.


The entire process of developing new products in the pharmaceutical industry that we discussed in this article can take ten to twelve years to fully implement. 

The success factors for developing new products are similar across different industries. However, the lengthy regulatory process, and the degree of risk involved, sets the pharmaceutical industry apart.