English: "Illustrated is the model’s “base case”, which tracks a representative portfolio of candidate drugs as it progresses and erodes through clinical trials, culminating in a single drug approval. The model bases phase-by-phase attrition rates (“attrition during phase”), discovery and preclinical costs, development costs (“cost per candidate”) and cost of capital on Paul et al.5 to compute a portfolio-wide discounted cashflow. In contrast with prior approaches, the model tracks the underlying causes of clinical trial failure (safety-related, efficacy-related, and other failures) using parameters derived from literature7,9,24,25, a feature that permits us to determine the composition of the drug portfolio in each stage of development in terms of candidates that are safe and effective, safe and ineffective, unsafe and effective, and unsafe and ineffective, as illustrated. Improvements in the predictive validity of preclinical safety testing can be captured through their impact on the makeup of the portfolio entering Phase I clinical trials: better preclinical safety testing reduces the proportion of unsafe drugs that enter the clinic relative to the “base case”; the model permits analyzing the impact of such changes on the discounted cashflow and the portfolio’s profitability. The model is provided in full in Supplementary Data 2 as a formula-driven Microsoft Excel file."