Although they deliver a wealth of products that save lives and improve the quality of life, medical device and pharmaceutical companies are trailing other industries in terms of innovation, according to a new report.

The Innovation Index released jointly by consulting firm Strategos and stock research company wRatings states that, despite increasing R&D spending by 2% while most other industries reduced R&D spending by 4%, the medical device and pharmaceutical industries lag significantly in this area behind the food and beverage and consumer electronics markets, for example. This could, the report speculates, factor into the low ROI recently experienced by some life sciences companies.

"These are indeed some of the best inventors in the world," the report states. "Unfortunately, their innovation performance lags significantly behind other industries that have appeared in the Strategos/wRatings Innovation Index, highlighting the point that innovation is more than technology invention."

Potential problem areas cited by the report include the life science industry's tendency to keep its eyes on the prize, so to speak. By concentrating on developing the next blockbuster product, companies may be missing or bypassing solid smaller opportunities. Furthermore, the authors note that the most useful products in the food and beverage industry are frequently the most simplistic. In contrast, the most useful drug or device products are often the most complicated.

"Healthcare is on the brink of profound change driven by the inescapable forces of new regulations, demographics, consumerism, and costs of new technology," the report concludes. "In the face of these changes, there will be a great shift in the competitive landscape.  Pumping money into R&D is not the only lever for success. In fact, R&D spending has no correlation with the primary measures of corporate success."

Should life sciences companies examine the possibility of a new business model? How important is R&D in life sciences? Read the full report and sound off in the comments section below.