The Outlook 2007 report says that drug developers need to improve the efficiency of their R&D programmes in the face of increasing costs and loss of patents on blockbuster drugs.
But, there are several ways that pharma companies can achieve this and the report is hopeful that they are being implemented to good effect.
"While drug developers have understood that their long-term viability depends on improving R&D productivity - and have taken steps to address this issue - they're about to see their efforts pay off in terms of improved success rates and greater numbers of new medicinal products reaching the marketplace," said Tufts CSDD director Kenneth Kaitin.
Data from the Food and Drug Administration (FDA) shows that there has been a swing in New Molecular Entity (NME) approvals. The numbers of NMEs had been generally declining since 1995 before a recent revival. However, it seems to be smaller companies making the difference. As the numbers from big pharma has declined, small and mid-tier companies have shown rapid growth, peaking at around 70 per cent of all approvals in 2004.
The emergence of smaller companies as serious contributors to innovative products has provoked a larger number of collaborations with the industry's leaders.
The 10 largest pharmaceutical companies are not resting on their laurels though with the number of new drugs entering clinical trials up 52 per cent since 2003 compared to turn-of-the-century figures.
Developers are using new technologies to reduce late-stage development failures and keep the costs of R&D down; expenses that are often passed onto patients in the form of expensive drugs.
The report predicts that clinical trial success rates will improve as efforts are made to validate safety and efficacy biomarkers, develop ways to predict toxicology at the preclinical stage and expand research into how genetic variations effect drug response.
The discovery process can be further improved by using pre-competitive data to identify and validate new targets.
Kaitin said: "Most notably, drug companies are improving their management of risk, especially by actively lowering late-stage attrition rates through greater use of information technology and other development practises."