Top 20 Pharma Ranks: As Some Move Up, Others Fall Down
Executive Summary
Sanofi and Gilead moved down in the rankings of Scrip's top 100 pharmaceutical companies, based on 2017 pharma sales, while Johnson & Johnson, GSK and AbbVie moved up. Shire joined the top 20 just as it is about to be consumed by Takeda.
The top 20 names in the latest Scrip 100 listing, based on full year 2017 pharmaceutical revenues, were largely unchanged from the previous year, but there were some fluctuations. One notable change was that Shire PLC joined the ranks of the top 20 for the first time, just as the Irish-headquartered pharma is poised to be consumed by Takeda Pharmaceutical Co. Ltd..
Shire moved up from being the number 24 pharmaceutical company in the world in Scrip 100’s latest rankings to number 19 this year, knocking out Astellas Pharma Inc. and pushing Boehringer Ingelheim GMBH down to number 20.
Now, with Takeda's proposed merger of Shire heading toward a close at the start of 2019, the combined company will be poised to shake up the top 20 company rankings next year. The new Takeda would be on track to move up to the number seven position in the Scrip 100 from its current place at number 18, based on Takeda and Shire's combined FY 2017 pharma revenues of $30.5 billion.
Takeda is acquiring Shire for $62.4 billion and the deal represents the industry's only mega-merger of 2018. The acquisition represents the fifth largest biopharma deal in history.
The top 20 pharmaceutical companies saw an impressive $523.0 billion in combined pharmaceutical revenues in 2017, versus $507.1 billion generated by the top 20 class the prior year. There were some minor changes in the accounting for health care revenues in 2017. The most recent Scrip 100 data were collected by Datamonitor Healthcare, using a slightly altered methodology to last year.
In comparison, the top 100 pharmaceutical companies generated $747.0 billion in pharma revenues in 2017, demonstrating the dominance of the top 20 companies in the industry.
Pfizer Holds Top Spot
Pfizer Inc. held its strong lead as the number one pharmaceutical company in the world, with more than $49 billion in pharmaceutical revenues, while Novartis AG and Roche held their number two and number three positions, with $43.1 billion and $40.5 billion in pharma revenues, respectively.
Aside from Shire, other drug makers moved up in the top 20 rankings, including Johnson & Johnson, which moved up from number six to number four on strong 8.3% pharmaceutical revenue growth. On the Scrip 100 list, J&J swapped places with Sanofi, which is continuing to face a challenging environment for its diabetes and cardiovascular disease business segment.
GlaxoSmithKline PLC and AbbVie Inc., neck-and-neck with $28.8 billion and $28.2 billion in revenues, respectively, each moved up one slot to number seven and eight in the rankings. Elsewhere, Gilead Sciences Inc. is one company that saw its ranking fall from number seven to number nine; its 2017 revenues fell 14.3% to $26.1 billion from $30.4 billion in 2016, on lower sales of its hepatitis C medicines.
Teva Pharmaceutical Industries Ltd. managed to hang onto its position in the top 10, despite a challenging environment for US generic drugs and the loss of exclusivity of the important 40 mg version of its blockbuster Copaxone (glatiramer) in October 2017. The impact of the loss of Copaxone was felt more acutely in 2018 and could drop Teva out of the top 10 list in the upcoming Scrip 100 collection.
Bristol-Myers Squibb Co. continued its steady climb up the pharma rankings from number 17 in 2017’s Scrip 100 and number 15 last year, to number 14 in the 2019 publication, driven by strong sales of the immuno-oncology pillar Opdivo (nivolumab) and hematology product Eliquis (apixaban).
Pharma's Big R&D Spenders
The top 20 pharmaceutical companies invested $108.0 billion into research and development in 2017, with the highest spenders being Roche and J&J, which invested $10.6 billion and $10.4 billion, respectively.
The spend by the diversified companies goes toward more than just pharma R&D however, and J&J is the largest of the diversified pharmas included in the Scrip 100. Including J&J's medical devices and consumer healthcare businesses, the big pharma is the largest company in the group based on consolidated revenues of $76.5 billion.
Top 20's Spend On R&D In Relation To Total Revenue
Thus, J&J's R&D investment, while significant, represented only 13.5% of consolidated revenues. Nonetheless, the company directs most of its R&D spend to the pharmaceuticals groups and J&J raised its investment in R&D by 16% in 2017 versus 2016. The company directed about $8.4 billion to pharma R&D in 2017, or 23% of pharmaceutical revenues.
Roche's investment is one of the highest spends in the industry at 20% of consolidated revenues. But Roche's spend as a percent of consolidated sales was outpaced by Bristol-Myers Squibb, AstraZeneca and Merck. Bristol invested a notable 30.8% of revenues into R&D. AstraZeneca invested 25.7% of revenues, or $5.78 billion, in R&D in 2017, though the spending declined a slight 2.3% in 2017 versus the prior year. Merck's $10 billion R&D investment represented 24.9% of revenues.
Teva had the smallest R&D spend among the top 20 pharmaceutical companies as a percent of revenue, with its $1.85 billion R&D investment representing 8.1% of consolidated sales. Teva's R&D investment declined about 12% over 2016, unsurprisingly given the company's ongoing financial challenges. Shire and Novo Nordisk were also on the smaller end of the investment scale, investing 11.3% and 11.8%, respectively, in R&D.
This article is part of the Outlook 2019 series – an annual collection provided exclusively to subscribers of Informa Pharma Intelligence publications.