Financial performances of 10 leading global pharmaceutical companies have received a major setback during the first nine months of the current year ended September 2012 on account of patent expirations, stiff generic competition, austerity measures in regulated markets and US healthcare reform. The pharmaceutical sales, including that of vaccines, of ten companies declined by 3.3 per cent to US$ 260 billion from $269 billion in the corresponding period of the previous year. The pharma sales in US declined by 8.1 per cent to $102 billion in the nine month period from $106 billion in the last period.
For the first time, Novartis clinched the top position with worldwide pharmaceutical revenues of $39,071 million displacing Pfizer to second level with pharmaceutical sales of $38,321 million during nine months period ended September 2012. Pfizer was on first position for quite some time and at the end of December 2011 its pharmaceutical sales was at $57,747 million and that of Novartis was at second position with sales of $53,935 million.
The loss of market exclusivity of Lipitor impacted the pharmaceutical sales of Pfizer during the first nine months of September 2012. Lipitor sales declined sharply by 55.6 per cent to $3,364 million from $7,578 million in the same period of last year. Similarly, Pfizer's sales of blockbusters like Prevnar13 and Norvasc also declined by 3,5 per cent and 7.4 per cent $2,725 million and $1,001 million respectively and an that of Enbrel (Outside the US and Canada) improved marginally 1.4 per cent to $2,780 million.
The R&D expenditure of ten companies improved only by one per cent to $45,816 million from $45,348 million, Pfizer's R&D expenditure declined by 11.6 per cent to $5,734 million from $6,487 million,. The R&D expenditure of Novartis, Merck & Co and Sanofi declined by 4.9 per cent, 1.7 per cent and 4.2 per cent during the period under review. GlaxoSmithKline's R&D expenditure improved only by 0.4 per cent to $4,570 million. The selling, marketing and administrative expenditure declined by 3.4 per cent to $136,200 million from $141,012 million in the similar period of last year.
The performance on operational level was also not satisfactory. The operating profit of ten companies declined by 5.1 per cent during the first nine months of 2012 to $70,863 million from $74,656 million in the same period of last year. Abbott, Merck & Co and Sanofi managed to improve operational performance despite several odds, but AstraZeneca, Eli Lilly, Pfizer, GSK, Novartis, J&J and Teva Pharma failed to generate positive growth in operating profit.
The net profit of these companies declined by 7.4 per cent to $56,296 million from $60,760 million in the last period. The net profit of AstraZeneca, J&J and Teva declined sharply by 43.8 per cent, 12.4 per cent and 27.1 per cent respectively. Abbott's net jumps by 57.9 per cent to $4,910 million and Merck's net moved up by 10.5 per cent to $5,261 million in the corresponding nine months of 2011.
Novartis sales of pharmaceutical including that of Alcon, Sandoz and vaccines & diagnostics, declined by 2.9 per cent to $39,071 million from $40,232 million in the corresponding nine months of last year. Its pharmaceutical sales, excluding Alcon, Sandoz and vaccines & diagnostics, declined by 1.3 per cent to $23,877 million from $24,195 million in the last period as its loss of exclusivity of Diovan on September 2012 in the US. Diovan is sold as a mono-substance and a combination product. No generic competitor has yet been approved by the US FDA for Diovan. Recently launched products contributed $8.3 billion of net sales and represented 35 per cent of total net sales for the pharmaceutical division of Novartis.
Sanofi, Merck & Co and GlaxoSmithKline have maintained their pharmaceutical sales ranking at third, fourth and fifth position during the first nine months of 2012. Sanofi's pharmaceutical sales moved up marginally by 0.3 per cent to $31,815 million. However, pharmaceutical sales of Merck & Co declined by 0.1 per cent to $30,517 million from $30,534 million and that of GlaxoSmithKline's sales declined by 0.7 per cent to $25,488 million. Abbott climbed up to sixth position from earlier seventh position , pushing down AstraZeneca. Abbott's pharmaceutical sales improved by 3.1 per cent to $25,214 million from $24,459 million. AstraZeneca's revenues declined sharply by 17 per cent to $20,691 million from $24,925 million primarily due to loss of exclusivity for Seroquel IR and disposals of Astra Tech and Aptium.
Johnson & Johnson (J&J), Eli Lilly and Teva Pharmaceutical also maintained their position at eighth, ninth and tenth places. The pharmaceutical sales of J&J improved by 3 per cent to $18,826 million from $18,274 million, while the sales of Eli Lilly & Co declined sharply by 11 per cent to $15,1164 million with Zyprexa patent expiration. The sales Zyprexa declined by 66 per cent to $1317 million. However, its sales of Cymbalta went up19.9 per cent to $3,574 million.
Based on the financial performance of 10 leading companies in the first nine months of 2012, the pharma segment is likely to generate negative top line as well as bottom line growth for the fully year 2012. The small and medium players with the help of strong presence in emerging markets will likely to get better returns than big pharma companies.
International Pharma companies (Tables)