The pharmaceutical industry is in the midst of a new era of next-generation high-throughput screening which will drive a significant improvement in R&D productivity, according to a report published by broker Liberum Capital.

The report, authored by Naresh Chouhan, pharmaceutical analyst at Liberum, points to "three key scientific advances" which occurred between 2003 and 2008. Firstly, "the genomic revolution is finally leading to more targets", while (secondly), new techniques are capable of hitting targets previously considered undruggable. Finally, new screens that can identify off-target effects early and prevent later safety issues (in vitro pharmacological profiling), is potentially reducing attrition rates and costs.

Mr Chouhan and his team state that while "given that these advances only started to be used in the last decade we wouldn’t expect there to be a significant improvement in drug approvals yet, although we are already seeing the first wave coming through".

Novartis is top pick

In terms of companies, the Liberum report believes that Novartis and Roche are the best-equipped, noting that the former has invested heavily in early-stage R&D through Novartis Institutes for BioMedical Research, while the latter has Genentech under its umbrella. The broker adds that "we believe the lack of early-stage R&D at GlaxoSmithKline, AstraZeneca and Sanofi places them at a strategic disadvantage".