World’s top pharmaceutical companies are heading for a period of gloom in the years to come if the performances of these companies during 2012 is any indication. The sales of 15 leading international companies declined by 1.4 per cent to $433 billion during the calendar year 2012 as against $439 billion recorded in the previous year, The drop in profit before tax of these 15 companies is still worse with an overall decline of 3.5 per cent to $115 billion from $120 billion in the previous year. Three companies reported sharp fall in their profits are AstraZeneca, Bristol and Teva Pharma. AstraZeneca reported a 37.6 per cent drop in profit, Bristol a 66.5 per cent decline in profit and Teva’s profit fell by 38.5 per cent during 2012. The profit before tax of Pfizer, Bayer and GSK also declined during 2012. However, Merck, Abbott and Amgen posted a growth in profit before tax of above 20 per cent. The financial performances of all these 15 MNCs were under tremendous pressure during 2012 mainly on account of loss of patent exclusivity for many of their products, poor outcome from research & development activity and stiff competition from generics. It has to be noted that the sales of leading products like Lipitor, Plavix, Seroquel IR & XR, Singulair, Zyprexa, Nexium, Xalatan/Xalacom, Taxotere, Geodon/Zeldox, CellCept and Nexaver declined significantly due to patent expirations and stiff competition from generic versions during 2012.
Two significant developments have taken place in the global pharmaceutical market place during 2012. For the first time, Pfizer has been pushed down to the second position in global ranking of pharmaceutical companies by Novartis in sales. Novartis reported sales of $52.93 billion during 2012 as against Pfizer’s sales of $51.21 billion. Pfizer's pharmaceutical sales declined with loss of patent exclusivity for five products namely Lipitor, Xalatan, Aromasin, Geodan and Detrol during last couple of years in the US, Europe and other markets. Secondly, Lipitor of Pfizer has been displaced as the largest selling drug in the world by Humira of Abbott. Lipitor, the cholesterol drug of Pfizer has been the top blockbuster for several years with its sales touching a peak of 13 billion dollars just three years ago. Expiry of its patent in 2011 brought Lipitor to 17th position in blockbuster ranking with worldwide sales plummeting to 3.9 billion dollars in 2012. Humira, the top drug, now reported a sales of 9.2 billion dollars. Continuing patent expiries is indeed a matter of serious concern for the global pharma. For this the only answer is more new molecules from the research labs. But this is not happening. What is disturbing the top international pharma companies, in this juncture, is the failing research productivity despite increase in the R&D spending. The combined R&D expenditure of the 15 companies moved up by 3.5 per cent to $86,475 million in 2012 from $83,533 million in the previous year. This works out to 14.9 per cent of aggregate revenue in 2012 as against 14.4 per cent in the previous year. The companies like Novartis,GSK, AstraZeneca and Roche claim to have a good number of products in pipeline but entry into the market place is rather slow. International pharmaceutical companies have to, therefore, adopt multiple strategies to survive in this extremely challenging phase.