GLOBAL - The global pharmaceuticals industry must work with healthcare providers to ensure vital medical research translates into affordable drugs for priority health needs, according to a new report that was a result of dialogue between global institutional investors and major pharmaceutical companies.

The fourth report of the PharmaFutures project, 'Shared Value: Rebuilding Pharma's Contract with Society', identifies a growing mismatch between patients' unmet needs and pharmaceutical research and development (R&D), driven by changes in what society is willing to pay for and concerns among investors about the return on investment.

It asks investors to:

Continue to play the critical role of funding new drug discovery Be prepared to support new exploratory models of risk-sharing Articulate a strategic viewpoint to investee companies and be prepared to use activist tactics if necessary Evaluate companies on the basis of overall portfolio

Retain focus on the long-term return from R&D

Daniel Summerfield, co-head of responsible investment at the UK's Universities Superannuation Scheme (USS), said: "USS is a major investor in global healthcare companies. It is our view that the pharma model is in need of reformation, particularly with regard to reframing relationships among its key constituents.

"There are a number of interrelated issues identified in the report that have the potential to become game-changers for the industry, as they present significant value-drivers and opportunities if collective solutions can be found."

The report concludes that the industry needs to reframe its social contract to ensure market signals about unmet patient needs and incentives for R&D are better aligned.

It also offers recommendations to society, industry and investors to help make this happen.

The initial PharmaFutures project was founded in 2003 and has been running since then. Participants in PharmaFutures 4 include APG, Carson Capital, Fidelity, Robeco, TIAA-CREF and USS and pharmaceutical companies Amgen, GSK, Johnson & Johnson, Novo Nordisk and Shire.

The participating institutional investors represent approximately £1.7trn (€1.9trn) in assets under management.