A developer’s track record at bringing novel medicines to market is one of the ultimate tests of R&D prowess – as is business development acumen. A look at how the world’s 11 big pharma companies have been faring on launches reveals very different performances.
With 12 FDA approvals over the past five years Novartis leads the pack, boasting notable new arrivals including the gene therapy Zolgensma and Kymriah, the first approved Car-T therapy. Bristol Myers Squibb brings up the rear with only three to its name, all of which were gained through the Celgene acquisition, a move that could have been spurred by expectations of a barren regulatory period.
The numbers in this analysis refer only to projects owned at the time of approval; this also includes only NMEs (novel molecular entities). Drugs acquired after regulatory nod, a legitimate way of building a pharma company, are not captured.
In reality investors probably do not care too much about where a drug originates or at what point it is bought in. But they do want to see a steady flow of projects through the pipeline, to replace fading franchises.
It should also be remembered that first-time approvals form only one part of a company’s R&D strategy; broadening the use of existing medicines is also hugely important, particularly in cancer and immunology. In many cases this can represent a lower-risk use of capital than focusing on novel agents.
This why Bristol will have been heavily invested in expanding the label of Opdivo, its blockbuster anti-PD-1 antibody, over this period.
The chart below details the net present value of each company’s marketed drug portfolio, as calculated by Evaluate Omnium from sellside consensus forecasts, and the contribution from the novel agents counted above.
This points to a relatively productive period for Roche, Lilly and Abbvie, with the recent arrivals counting for more than a third of each group’s marketed product NPV. Sitting behind these numbers are big blockbusters, including the cancer drugs Tecentriq and Verzenio, from Roche and Lilly respectively, and Abbvie’s new autoimmune therapies Rinvoq and Skyrizi.
Considering the flak that Glaxosmithkline's pipeline problems are attracting, the UK company does not come off too poorly in this analysis. A slight caveat is that the group's numbers include two novel HIV treatments on which Glaxo shares economics with other parties involved in the Viiv joint venture.
Still, Glaxo's problem is that investors have lost confidence in its ability to deliver. While it ranks mid-table on the volume of new arrivals, the value of its marketed portfolio is second smallest, ahead only of Lilly. And the respective valuations of these two companies shows how investors view their growth prospects: Glaxo's market cap sits at $102bn, the smallest of the big pharma set, while Lilly's recently surged to $226bn.
As such, this analysis represents only one way to consider the progress of these developers. But, as Bristol demonstrated, any flagging in a company's ability to bring novel medicines to market can lead to drastic action.
(This is a corrected version of an article that ran previously. Roche's NME approval count had been cut by one, and the NPV of recent NME's for several companies has been reduced).