La Pharmaceutical Companies

[Lynn Hepler]

Inthis analysis, Pharmaceutical Technology investigates the global top ten pharma companies as trends have shifted significantly in the pharma sector in the last few years due to the Covid-19 pandemic, rising inflation, supply chain disruptions and more.

While some companies have remained at the forefront of the global pharma industry, in the aftermath of the Covid-19 pandemic the revenues of others, such as Pfizer, have significantly dropped compared to the previous year.

This growth was primarily fueled by pharmaceutical products across the areas of oncology, immunology and neurology. Specifically, growth in sales was demonstrated in oncology products such as Darzalex (daratumumab), Erleada (apalutamide), Tecvayli (teclistamab-cqyv) and Carvykti (ciltacabtagene autoleucel), along with immunology drugs Stelara (ustekinumab) and Tremfya (guselkumab), and Spravato (esketamine) in the neurology sector. However, this growth was partially offset by the decline in sales of products like Zytiga (abiraterone acetate) and Imbruvica (ibrutinib) in oncology, and Remicade (infliximab) in immunology.

Sales in the Pharmaceuticals Division rose by 6% (excluding the Covid-19 medication Ronapreve (casirivimab/imdevimab), which saw a 9% increase driven by sustained high demand for newer medications). Leading this growth were other therapies like the eye medicine Vabysmo (faricimab-svoa), followed by Ocrevus for multiple sclerosis, Hemlibra for haemophilia A, and Polivy for blood cancer.

In contrast, sales in the Diagnostics Division decreased by 13%, primarily due to the exceptional demand for Covid-19 tests observed in 2022. However, the base business of this division showed robust momentum with a 7% increase in sales.

Some key developments during Q4 2023 and Q1 2024 include the FDA approval of Vabysmo for the treatment of retinal vein occlusion, a severe eye condition, as well as the FDA approval of Xolair, a food allergy medication. The European Union (EU) also approved a subcutaneous version of Tecentriq (atezolizumab), which is a cancer immunotherapy drug.

Pharmaceutical product sales for FY 2023 witnessed a 3% increase, reaching $53.6bn. This growth in pharmaceutical sales was mainly fueled by elevated sales in oncology, notably with Keytruda (pembrolizumab), combined with increased sales of vaccines. Additionally, FY global sales totaled $60.1bn, reflecting a 1% increase from the previous year.

The reduced revenues were mainly attributed to an expected decrease in global revenues from its Covid-19 vaccine, Comirnaty, and antiviral drug Paxlovid (nirmatrelvir/ritonavir). A negative impact of foreign exchange rates was also noted.

The company announced that the global net revenues from their immunology portfolio reached $26.14bn, showing a decline of 9.6% on a reported basis or 9.2% on an operational basis, primarily because of competition from Humira biosimilars. The oncology portfolio also witnessed a decline of 10.1% based on reported figures or 9.8% based on operational figures, totaling $5.92bn in net revenue. However, their neuroscience portfolio exhibited robust improvement, by achieving an 18.2% rise in global net revenues, reaching $7.72bn.

In January this year, Novartis announced a staggering 62% increase in its net income for the FY 2023, credited to a rise in operating income and one-off favorable tax effects. The net income significantly increased from $6.04bn in the previous year to $8.6bn on constant rates.

The reported sales growth was particularly driven by the sustained robust performance of Entresto (sacubitril + valsartan), Kesimpta (ofatumumab), Kisqali (ribociclib succinate), Pluvicto (lutetium Lu 177 vipivotide tetraxetan) and Scemblix (asciminib hydrochloride), which was partially offset by generic erosion mostly for Gilenya (fingolimod hydrochloride), a drug for relapsing multiple sclerosis.

Specifically, sales from the fourth quarter demonstrated a 1% increase, reaching $11.5bn which primarily stemmed from higher sales of new products as well as Eliquis (apixaban) and Opdivo (nivolumab). These sales compensated from the lower sales of Revlimid (lenalidomide).

The company highlighted their continuous approach to long-term improvement of their growth profile mentioning key planned acquisitions of Karuna Therapeutics and RayzeBio as well as the completion of the purchase of Mirati Therapeutics.

This listing is limited to those independent companies and subsidiaries notable enough to have their own articles in Wikipedia. Both going concerns and defunct firms are included, as well as firms that were part of the pharmaceutical industry at some time in their existence, provided they were engaged in the production of human (as opposed to veterinary) therapeutics. Included here are companies engaged not only in pharmaceutical development, but also supply chain management and device development, including compounding pharmacies.

Factors Influencing R&D Spending. The amount of money that drug companies devote to R&D is determined by the amount of revenue they expect to earn from a new drug, the expected cost of developing that drug, and policies that influence the supply of and demand for drugs.

To remove the effects of inflation, the Congressional Budget Office adjusted dollar amounts with the gross domestic product price index from the Bureau of Economic Analysis. Amounts are expressed in 2019 dollars.

In this report, the Congressional Budget Office assesses trends in spending for drug research and development (R&D) and the introduction of new drugs. CBO also examines factors that determine how much drug companies spend on R&D: expected global revenues from a new drug; cost to develop a new drug; and federal policies that affect the demand for drug therapies, the supply of new drugs, or both.

The pharmaceutical industry devoted $83 billion to R&D expenditures in 2019. Those expenditures covered a variety of activities, including discovering and testing new drugs, developing incremental innovations such as product extensions, and clinical testing for safety-monitoring or marketing purposes. That amount is about 10 times what the industry spent per year in the 1980s, after adjusting for the effects of inflation. The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000. That revenue share is larger than that for other knowledge-based industries, such as semiconductors, technology hardware, and software.

The number of new drugs approved each year has also grown over the past decade. On average, the Food and Drug Administration (FDA) approved 38 new drugs per year from 2010 through 2019 (with a peak of 59 in 2018), which is 60 percent more than the yearly average over the previous decade.

The federal government affects R&D decisions in three ways. First, it increases demand for prescription drugs, which encourages new drug development, by fully or partially subsidizing the purchase of prescription drugs through a variety of federal programs (including Medicare and Medicaid) and by providing tax preferences for employment-based health insurance.

Third, some federal policies affect the number of new drugs by influencing both demand and supply. For example, federal recommendations for specific vaccines increase the demand for those vaccines and provide an incentive for drug companies to develop new ones. Additionally, federal regulatory policies that influence returns on drug R&D can bring about increases or decreases in both the supply of and demand for new drugs.

In real terms, private investment in drug R&D among member firms of the Pharmaceutical Research and Manufacturers of America (PhRMA), an industry trade association, was about $83 billion in 2019, up from about $5 billion in 1980 and $38 billion in 2000.1 Although those spending totals do not include spending by many smaller drug companies that do not belong to PhRMA, the trend is broadly representative of R&D spending by the industry as a whole.2 A survey of all U.S. pharmaceutical R&D spending (including that of smaller firms) by the National Science Foundation (NSF) reveals similar trends.3

Small drug companies (those with annual revenues of less than $500 million) now account for more than 70 percent of the nearly 3,000 drugs in phase III clinical trials.1 They are also responsible for a growing share of drugs already on the market: Since 2009, about one-third of the new drugs approved by the Food and Drug Administration have been developed by pharmaceutical firms with annual revenues of less than $100 million.2 Large drug companies (those with annual revenues of $1 billion or more) still account for more than half of new drugs approved since 2009 and an even greater share of revenues, but they have only initiated about 20 percent of drugs currently in phase III clinical trials.3

Information about the kinds of new drugs the pharmaceutical industry has introduced can be inferred from changes in retail spending across different therapeutic classes of drugs. When ranked by retail spending, therapeutic classes in which many expensive specialty drugs have been introduced over the past decade top the ranking, whereas classes in which the best-selling drugs are now available in generic form rank lower now than they did a decade ago.6 Information about the kinds of new drugs the pharmaceutical industry may introduce in the future can be inferred from clinical trials under way.

That increase in drug approvals does not, by itself, indicate the extent to which the new drugs are particularly innovative (for instance, targeting illnesses in new ways) as opposed to improving only incrementally upon existing drugs. Furthermore, the recent trend of sharply rising R&D spending does not necessarily portend a continued high rate of drug introductions. A decline in clinical trials success rates, for example, could slow the rate of new drug introductions even while R&D spending continued to increase. Additionally, not all R&D spending is directed toward development of new drugs. Drug companies devote some R&D resources to finding effective new combinations of existing drugs, as with newer HIV treatments and preventatives, or to new drug-delivery mechanisms, such as insulin pumps.

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