Industry Pulse: Biopharma in charts
BioPharma Dive strives to provide insight into the inner workings of the industry, giving context to the headlines. In that spirit, we have compiled data on R&D spending and drug sales which we think will help support and frame our daily coverage.
These charts will be updated each quarter with the release of new public data on revenues and spending. We hope you'll bookmark and return to this page as a resource for understanding where biopharma companies rank in relation to their peers.
R&D spending is an oft-quoted statistic in biopharma, used to illustrate company strategy and commitment to internal drug development. It can also be a point of criticism and scrutiny. Valeant, for example, has been skewered — along with some other notable biotech and pharma companies — for relying on a business model predicated on low R&D spending and aggressive M&A.
The following charts show R&D expenditures as a percent of product sales for 16 leading biopharma companies. The top blue bar depicts a moving average of the past four quarters, while the lower red bar shows the ratio from the most recent quarter for which public data is available.
BioPharma Dive chose to compare R&D spending to product sales, rather than top-line revenue, in an effort to more accurately reflect investment efficiency and smooth spiky boosts to top-line revenue from asset sales and collaboration revenues.
Both Bristol-Myers and Eli Lilly have moved to build out their pipelines in recent years. Eli Lilly in particular has seen success with approvals for Taltz (ixekizumab) and Lartruvo (olaratumab) last year and for Portrazza (necitumumab) in 2015.
Bristol-Myers is in the midst of restructuring its R&D operations, a move aimed at improving the company's R&D competitiveness.
One note: Bristol-Myers' high four-quarter moving average reflects increased license and asset acquisition costs charged to R&D in the fourth quarter of 2015.
Gilead stands out here. Faced with plummeting sales of its top-selling hepatitis C drugs, the California biotech has failed to develop a new hit outside of HIV or hepatitis C. Setbacks in studies testing drugs for the liver disease NASH, myelofibrosis and ulcerative colitis have only increased pressure on the company to add to its comparatively bare cupboard through M&A.
Celgene's extraordinarily high 55.7% figure in Q3 was due to an $623 million asset acquisition expense related to the purchase of EngMab that was charged to the R&D account for accounting purposes. Celgene has also ramped up spending on its early- to mid-stage pipeline, as well as on studies to expand approvals for existing drugs.
Revenues from legacy drugs and consumer health products balloon product revenues for the pharma giants listed above, leading to lower R&D spending as a share of sales. (In absolute spending, however, these four pharma giants far outspend others in the industry).
Novartis and Roche, as the more prescription drug-focused of the four, have predictably higher investment allocations to R&D. (*Roche's average only includes Q1 and Q2 of this year, as the company only breaks down R&D spending by half year.)
That story would change if J&J's consumer and medical device sales were excluded from the calculation. Pharmaceutical sales accounted for only 47% of J&J's total sales in Q3. While the company doesn't breakdown R&D expense by unit, spending as a share of just pharmaceutical sales would likely be higher than the overall 12.2%.
Allergan's relatively low R&D spending as a share of product sales reflects its focus on "open science" and emphasis on buying up assets from outside the company.
AstraZeneca, on the other hand, is in the midst of a push to grow revenues to $45 billion by 2023. Delivering on pipeline assets like the immuno-oncology drug durvalumab and benralizumab in chronic obstructive pulmonary disorder will be important to achieving that goal.
Best-selling drug sales
On the flip side of pipeline hopes and dreams, each one of these 16 companies has a blockbuster drug in its portfolio, earning billions in annual sales. Some are more dependent on their flagship drugs than others. Celgene and AbbVie, for example, both earn more than 60% of their product revenue from sales of just one leading drug, respectively.
Just as R&D spending can be a useful lens to interpret company strategy, putting a number to a company's dependence on a specific drug can highlight future vulnerabilities. The following charts show bestseller sales as a percent of total sales.
AbbVie's Humira (adalimumab) pulled in more than $15 billion in sales over the last 4 (sequential) quarters, making it one of the world's most lucrative drugs.
But one of the main patents in the U.S. for Humira expires soon. And a biosimilar, made by Amgen, was recently approved by the Food and Drug Administration, although AbbVie plans to fight it. Protecting Humira as patents expire will be crucial to avoid a painful hangover.
Bristol-Myers Squibb had two drugs claim the top spot over the past four quarters: the anticoagulant Eliquis (apixaban) and the fast-growing checkpoint inhibitor Opdivo (nivolumab). Expect Opdivo to make up a greater portion of company sales in coming quarters.
Gilead, which soared on skyrocketing sales of Harvoni (ledipasvir/sofosbuvir) and Sovaldi (sofosbuvir), has seen sales tumble in recent quarters. The fall from grace has pushed its HIV portfolio into the spotlight and ratcheted up pressure on the drugmaker.
Celgene gets less attention as a one-hit wonder, but Revlimid (lenalidomide) makes up the lion's share of its business. Competition from new multiple myeloma drugs such as Amgen's Kyprolis (carfilzomib) and J&J's Darzalex (daratumumab) will be an important competitive threat to watch.
Novartis has already begun to feel the effect of Gleevec's (imatinib) patent expiry in the U.S., as sales dropped 30% year over year in the third quarter.
All four the pharma giants have large product bases however, limiting exposure to any one drug.
Pfizer's pain drug Lyrica (pregabalin) just barely edged out its pneumonia vaccine for the top spot in Q2 last year, but the vaccine family otherwise earned best-selling status in the three other quarters represented.
Sanofi's Lantus (glargine), long a dominant force in diabetes, could see its position slip as it loses patent protection and Eli Lilly's competing biologic Basaglar begins to eat into market share in the U.S.
AstraZeneca's top drug has been the statin Crestor (rosuvastatin) for years, but patent expiry has hurt the British pharma too. The respiratory drug Symbicort (budesonide) is now its top-selling drug as sales of Crestor have slumped.
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