Big pharma holds steady on research spending

R&D spending by the world’s largest drug makers flatlined in 2022, with Roche footing the biggest bill and Astrazeneca the fastest accelerator.

Record amounts of money were thrown at drug development in 2021, but last year was a different story. Growth in R&D spending at the world’s 11 largest drugmakers flatlined last year as the urgency to develop Covid products abated, with only two companies – Astrazeneca and Sanofi – showing any real uptick in investment.

These numbers are unadjusted for inflation so this stagnation in spend must translate to a real-term drop in outlay. The 11 big pharma names put $104bn into R&D in 2022, accounting for 42% of the global biopharma sector’s total research bill last year, according to estimates from Evaluate Pharma.

Roche regained its position at the top of the table in 2022 – Pfizer’s huge Covid push had propelled it to the number one spot in 2021. Pfizer shaved 10% off its R&D bill last year, the biggest pullback across the big pharma group, followed by Bristol and J&J with cuts of 5% and 4% respectively.

R&D is only one form of investment for these companies, of course, and an article yesterday looks at how these groups stand when M&A is thrown into the mix: Big pharma’s biggest spenders revealed: 2022 edition.

On the flip side, Astrazeneca pointed to its Alexion acquisition in mid-2021 and the start of several late-stage trials, particularly in oncology, for its 19% hike in spending. Sanofi also snuck into double figures with a 10% rise in its R&D bill, citing increased spending on “priority” pharma assets and vaccines.

When it comes to R&D spend as a proportion of sales, these firms’ strategic approach to this investment becomes clearer. On this measure, shown in the chart below, Lilly joins Roche at the top of the table, with both companies investing substantial proportions into the pipelines. Their ratios are more than double that of Abbvie, which last year only reinvested 11% of its total prescription sales.

The caveat to remember here is that big topline moves, caused by acquisitions or patent expiries, will influence this ratio year-to-year. So shifts up or down do not necessarily reflect any strategic shift in approach to in-house development.

And what about those outside of big pharma? For this second analysis Evaluate Vantage chose 10 large drug makers that also invest heavily in pipeline development. Japanese developers were excluded because their non-calendar year reporting periods do not allow for accurate comparisons.

These groups are very different sizes so comparing across the peer group is not really advisable, although several stand out in the chart above.

Moderna is clearly re-investing its Covid windfalls enthusiastically; Regeneron too is throwing money at its pipeline to replace Eylea revenues; and the development of Novo’s late-stage diabetes and obesity franchise is also prompting rising R&D bills.

And while UCB, Vertex and Biogen all pulled back their R&D spending last year, all three sit near the top of the table in terms of investment as a proportion of sales, below.

Note: These figures have not been adjusted for inflation. R&D spending numbers exclude exceptionals. Not all companies exclude IPR&D, so these numbers could account for this differently. Rx sales as calculated by Evaluate Pharma. 

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