The Top Pharma RD Budgets Overview
Pharma companies have big spenders in drug R&D and are expected to defend their ranking in the near future. In 2017, top 15 largest pharma companies funneled more than $100 Bn into research and FDA have also approved more drugs than earlier.
Competitive Analysis - The top 10 pharma R&D budgets in 2018
- Roche
- Johnson & Johnson
- Merck & Co.
- Novartis
- Pfizer
- Sanofi
- Bristol-Myers Squibb
- AstraZeneca
- Eli Lilly
- GlaxoSmithKline
Roche’s R&D budget is always one of the biggest among the biopharma industry, and with a 6% increase to US$11.06 Bn in 2018. In 2018, Roche’s has some important approvals and launches for immuno-oncology drug Tecentriq in non-small cell lung cancer, Hemlibra for hemophilia A, and for first-in-class flu drug Xofluza. Roche’s R&D spendings not only goes on innovative new medicines but also on defensive strategy for older drugs. Roche’s M&A also shows its emphasis on digitalization. It has more than 100 digital technology and data initiatives already underway, focusing on analyzing large data sets at scale to look for new biomarkers and druggable targets and to help guide clinical development.
Johnson & Johnson has a dominant position in life sciences and is expected to maintain its position in the near future. In 2016, Johnson & Johnson spent US$9.09 Bn on its R&D, Owing to it, in 2018 revenue has jumped massively to US$10 Bn. R&D percentage has not only kept pace with this large increase but is also boosting itself. In 2019, Johnson & Johnson got an approval from FDA for ketamine-like drug esketamine which is a big win for the company.
Merck & Co. R&D budget ranks third biggest among the biopharma industry, owing to its spending of US$9.75 Bn in 2018. In 2019, Merck is trying to add Immune Design to its pipeline, coupled with developing drugs that activates the protein.
Novartis is one of the biggest R&D spenders in the industry with R&D budget of US$9.1 Bn in 2018. 2019 is shaping up to be a much bigger year for approval of New Molecular Entities (NMEs) for Novartis. Novartis also constructed a radioligand business from in 2018, closing a $3.9 Bn acquisition of advanced accelerator applications to give it cancer therapy.
Another company that saw a major restructuring drive in 2018 was Pfizer, owing to US$8.01 Bn R$D budget. The company brought all its innovative drug divisions under one Pfizer Biopharmaceuticals group after combining CHC with GlaxoSmithKline. The intention is to streamline processes and governance as well as free up cash for R&D and business development. In 2019, the company has marked with 100 programs in development, including 26 in phase 3, 28 in phase 2 and 11 at the preregistration stage. It will need to keep the pipeline buzzing to bring 15 new blockbuster medicines to market between 2018 and 2022. However, Pfizer has signaled its intention to ramp up its investment in external projects including neuroscience with a US$600Mn tranche of funding for VC arm Pfizer Ventures.
Sanofi is another company that has experienced a change in leadership specifically within R&D, owing to its budget around $6.66 billion in 2018. In the last couple of years, Sanofi has been shifting its research priorities focusing more on cancer, owing to its four-year alliance with MyoKardia for heart disease therapies. In 2018, Cablivi was one of three big product launches for Sanofi. PD-1 inhibitor Libtayo (cemiplimab) was Sanofi’s first immuno-oncology drug and could reach $1.4 billion in sales at peak.
The big news in 2019 for Bristol-Myers Squibb (BMS) was its buying of big biotech Celgene for $74 billion, but the roots of why it wanted to do that stretch back into 2018. In recent years, BMS has focused much of its pipeline on checkpoint inhibitors, first with Yervoy, and then with Opdivo. Before Celgene there was a record-breaking pact with biotech Nektar and its immunostimulatory therapy NKTR-214, which wedded to Yervoy and Opdivo to see whether a cocktail approach can boost its cancer-killing effects. BMS paid US$1 Bn upfront and bought US$850 Mn in Nektar stock at a 36% premium. This makes it the largest biotech licensing fee in history and shows how much BMS wants to find an edge over Keytruda.
2018 was a year of transition for AstraZeneca (AZ) on almost every front. After protracted decline since 2012, the company returned to sales growth considering the largest patent cliff in the industry, and there were big changes in the location, personnel and structure of its R&D operations. In last few years, company launched new cancer drugs namely EGFR inhibitor Tagrisso (osimertinib) for non-small cell lung cancer, PARP inhibitor Lynparza (olaparib) for ovarian and breast cancer, and immuno-oncology drug Imfinzi (durvalumab). This has driven the recovery and given AZ the breathing space it needed to make some changes conducts R&D.
In May 2019, Eli Lilly announced an US$8 Bn buyout of ASCO darling Loxo Oncology in a deal that gives the Indianapolis Big Pharma TRK inhibitor Vitrakvi, the first drug approved by the FDA to target tumors according to a genetic abnormality instead of the location of the cancer. 2018 was mixed bag for the company R&D-wise, owing to drop in phases 3 trials of BACE inhibitor lanabecestat in Alzheimer’s disease in June, and later in November when it dropped work on another earlier-stage BACE inhibitor. Oncology R&D remains a solid focus for Eli Lilly, and in May, it put $1.6 billion on the table for Armo Biosciences.
There has been a big jump and then fall in R&D budget of GlaxoSmithKline (GSK). In 2018, the R&D budget declined by 13% to $5.1 Bn. In July 2018, GSK intends to enhance a culture of increased accountability and smart risk-taking along with implementation of a new robust governance model. GSK has spent its 80% of R&D budget in four therapeutic areas while also exiting rare disease programs it had in the past years.