Industry Pulse: Who's spending on R&D?
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, as Valeant and other low-spending specialty pharmas have found out.
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.
Celgene upped its R&D spending by $358 million in the fourth quarter compared to a year ago, and by nearly $800 million in 2016 compared to 2015. The uptick was fueled by early-stage research work and clinical trial activity, along with R&D asset acquisition expenses from a December deal to buy part of Acetylon Pharmaceuticals.
Lilly has spending heavily on R&D as it seeks to meet its goal of launching 20 new medicines over the ten-year period ending in 2023. While the storied pharma has seen successes — with approvals for Taltz (ixekizumab) and Lartruvo (olaratumab) in 2016 — it also notched probably the most high-profile clinical failure of the year when its Alzheimer's hopeful solanezumab failed in Phase 3.
Overall, Lilly's R&D spending for the year was up 9% over 2015 due to higher late-stage clinical development costs.
AstraZeneca's spending rose by 2% year over year due to the absorption of R&D costs from ZS Pharma and Acerta Pharma, which the British drugmaker acquired in two deals signed towards the end of 2015.
Elsewhere, though, AstraZeneca has channeled 40% of its R&D investment towards oncology in an effort to catch rivals in the red-hot space. Headlining that spending are more than 20 clinical trials testing the checkpoint inhibitor durvalumab as a monotherapy and in combination with other agents.
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 revenue from sales of just one leading drug.
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.
Gilead's revenues from Harvoni have plummeted faster than many expected, falling by more than 50% in the fourth quarter compared to the same period a year before. The California biotech now expects its hepatitis C franchise to bring in between $7.5 billion and $9 billion in sales next year, down from a high-water mark of more than $19 billion in 2015.
That fall from grace necessarily lowers Harvoni's share of total revenue, but Gilead won't be getting any points from investors for relying more on the rest of its portfolio.
*Opdivo (nivolumab) overtook Eliquis (apixaban) as Bristol-Myers' best-selling drug in the third quarter of 2016. The Q4 figure reflects Opdivo while the moving average blends ratios involving the two drugs.
Being large has its perks. The four pharma giants are generally less reliant on one revenue stream than some of their other smaller pharma brethren. But with biosimilars threatening J&J's Remicade (infliximab) as well as Roche's Rituxan (rituximab) and Herceptin (trastuzumab), investors are looking for new growth products.
*Both Novartis and Pfizer saw different drugs claim the top-seller spot over the past four quarters. Novartis' Gilenya (fingolimod) overtook Gleevec (imatinib) while Pfizer's Prevnar vaccine has traded spots with Lyrica (pregabalin).
Teva recently won U.S. approval for a generic copy to GlaxoSmithKline's Advair (fluticasone/salmeterol), which could cut Glaxo's revenues from the drug in half if launched by mid-year.
*With the expiry of patent protection on AstraZeneca's Crestor (rosuvastatin), the asthma drug Symbicort has become the company's top-selling drug.
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