Big pharma’s biggest spenders revealed: 2022 edition
Pfizer’s buying spree propels it up the rankings, while Lilly continues to turn (relatively) small spend into big value.
A quiet time on the acquisition front for several big pharma names caused this group’s combined M&A and R&D bill to drop for the second year in a row in 2022. Even Pfizer’s buying spree failed to prop up the numbers, with the $157bn deployed the lowest number since 2018.
This still counts as big bucks, of course, particularly while many of those at the smaller end of the sector count their pennies. And, if a string of deals this year from the likes of Merck & Co, GSK and Astrazeneca are anything to go by, the world’s largest drugmakers should be considered active acquirers.
The chart below shows the combined spend of the sector’s 11 big pharma companies – named in the second chart below – based on reported figures and deal data collected by Evaluate Pharma. A full methodology can be found below.
It is notable that R&D spending flatlined in 2022 after climbing every year since 2011, when this cohort of names came into existence (with the creation of Abbvie). These numbers are unadjusted for inflation, meaning that a real-term drop happened last year. A deeper dive on these R&D trends will be published tomorrow.
A five-year view, split by company, shows which of these developers have been keeping deal bankers happy. Bristol Myers Squibb’s $74bn Celgene acquisition and the $63bn Abbvie-Allergan transaction mean that these two groups will be hard to displace until those deals drop out of the analysis, but Pfizer could give them a run for their money.
The developer’s M&A bill accounted for almost half of this cohort’s total M&A spending in 2022, and a similar proportion is possible this year, after it pledged $43bn for Seagen.
The last time Evaluate Vantage undertook this analysis Pfizer was towards the bottom of the table in terms of five-year acquisition costs. If a lowly ranking on this measure signals the time is right for big moves then perhaps news should be expected from Roche, Lilly or GSK. The first of these is in particular need of a pipeline boost, while GSK this week unveiled the $2bn acquisition of Bellus.
Lilly has less need to make any big M&A moves, of course, thanks to the spectacular success of Mounjaro, an internally discovered compound that some analysts have suggested could become biopharma’s first $100bn-a-year drug. The net present value of the type 2 diabetes and obesity drug – currently sitting at $80bn – is mostly responsible for Lilly’s impressive position on the y-axis in the chart below.
This plots each company’s combined M&A and R&D spend against the NPV of its pipeline plus any products launched or acquired in the period of this analysis (since 2018).
Abbvie has to a certain extent bought its position on the y-axis – the NPV of the Botox franchise is approaching $60bn – although two newly launched and internally developed immunology drugs, Rinvoq and Skyrizi, each boast NPV’s approaching $40bn.
Merck’s position on the chart belies the urgency with which it needs to diversify away from Keytruda; its $11bn bid for Prometheus this week was a nod in that direction.
Finally, Bristol’s Celgene acquisition continues to keep it an outlier in analyses like these. True, Revlimid’s patent expiry does nothing to flatter the NPV of products bought in that deal, but the sector has embraced bolt-ons over such huge transactions in recent years. Whether Pfizer can make Seagen pay will be the subject of next year’s look at these data.
Notes on methodology:
R&D costs exclude exceptional items, although it should be noted that companies account for IPR&D differently. Where relevant, pharma R&D only is reported (no medtech or OTC).
For M&A transactions, only full company takeouts and business unit buys are included, and only up-front fee counted for deals with downstream or contingent payments. Deals are counted in the year the transaction closes; where a deal is still open, the announcement date is used. All R&D and M&A numbers unadjusted for inflation.
NPV is computed by Evaluate Omnium from sellside consensus forecasts.
This article was corrected to state that Merck bid for Prometheus, not Protagonist as previously written.