As productivity in the pharmaceutical industry has fallen, calls for a new paradigm that would radically change pharmaceutical R&D have increased (Exhibit 1). The trend has been to view diminishing returns as a science problem. But while scientific innovation is certainly part of the solution, management should not overlook other, more familiar ways to create value. Increased attention to costs, speed of development, and decision making could increase the internal rate of return (IRR) of an average small molecule from around 7.5 percent—less than the industry’s cost of capital—to 13 percent (Exhibit 2).