World's top 15 pharmaceutical companies reported a disappointing performance in terms of sales and profitability during the year ended December 2013. One of the key reasons for the poor results is the patent expiries of many blockbusters during the last two years. Generic competition, unfavourable foreign exchange rates, slow growth in European economy, limited outcome from R&D investments and cost cutting measures adopted in developed countries are other reasons. Introduction of Medicare programmes in US to reduce healthcare cost hit the sales particularly in this biggest market.
Although launching of several new products by these companies generated good revenues during 2013, loss of blockbuster status of many other products resulted in overall decline or no growth in sales.
The Pharmabiz sample of leading 15 international companies viz., Novartis, Pfizer, Roche, Merck & Co, Sanofi, GlaxoSmithKline (GSK), Johnson & Johnson (J&J), AstraZeneca, Eli Lilly & Co, Teva Pharma Industries, AbbVie, a separated entity from Abbott Laboratories, Amgen, Bristol-Myers Squibb, Novo Nordisk and Bayer have registered net profit growth of 10.7 per cent during the year ended December 2013 to US$ 106,028 million from $95,771 million in the previous year. The net profit and operating profit of AbbVie, AstraZeneca, Merck & Co, Sanofi, Teva Pharma and Novartis was under pressure and declined during 2013.
The net sales from pharmaceutical segment, including vaccines and generics, remained flat at $431 billion as against $430 billion in the previous year. The total vaccines sales of Novartis, Merck, Sanofi and GSK improved by 3.6 per cent to $17,725 million from $17,115 million. GSK's sales of vaccines remained highest at $5,639 million followed by Sanofi at $5,115 million. The generic sales, however, declined by 5.3 per cent to $12,143 million from $12,822 million in the previous year as both the companies viz., Teva Pharma and Sanofi failed to generate higher generic sales.
Novartis International AG, a leading pharmaceutical giant from Switzerland, remained on top as per pharmaceutical sales which stood at $53,856 million during the year ended December 2013 as compared to $52,938 million in the previous year, a growth of 1.7 per cent. Pfizer maintained its second position despite its pharmaceuticals sales declined by 6.5 per cent to $47,878 million from $51,214 million. Roche climbed to third spot in pharma ranking among the 15 companies from fourth rank in the previous year. Its pharmaceuticals sales grew by 5.8 per cent to $40,768 million from $38,550 million. Merck & Co went down to fourth place as its sales declined by 7.8 per cent to $37,437 million from $40,601 million.
Sanofi maintained its ranking at fifth place despite lower pharmaceutical sales of $36,255 million as compared to $36,891 million during 2012. Johnson & Johnson (J&J), Amgen and Novo Nordisk moved one rank ahead to seven, twelfth and fourteenth during 2013 and AstraZeneca, Bristol-Myers and Bayer lost the previous position in pharmaceutical sales ranking.
For the better comparison purpose, Pharmabiz study has considered companies with financial year ended in December 2013 and 2012 only and converted currencies into US Dollar as at the end of December 2013 and 2012. We have not included Boehringer Ingelheim, based in Germany, as it has not announced its financial performance for the year ended December 2013. Its sales for the year ended December 2012 stood at $19,414 million. Similarly, we have excluded Takeda Pharmaceuticals, Japan from study as its year ending is March. Takeda's sales for the year ended March 2013 stood at $16,567 million. Abbott Laboratories has separated its pharmaceutical business into new company viz., AbbVie which ranked at 11 spot in this study.
These 15 companies' pharmaceutical sales in US improved only by 1.7 per cent to $196 billion from $193 billion in the previous year. Similarly, 10 companies from Pharmabiz sample registered pharmaceutical sales of $98 billion in Europe as compared to $92 billion, a growth of 6 per cent as GSK recorded significant growth of 53 per cent in Europe. Out of 15 sample companies, seven companies are selling pharmaceutical products in Japan. However, the pharmaceutical sales in Japan of seven companies declined by 15.5 per cent to $22 billion from $26 billion. Novartis notched highest pharma sales of $4,516 million in Japan.
Eli Lilly & Co remained on top in US with pharmaceutical sales of $20,961 million during the year ended December 2013 as compared to $ 20.566 million in the previous year. This was followed by Novartis and its pharmaceutical sales in US increased to $18,924 million from $18,592 million. Pfizer went down to third position in pharmaceutical sales in US and its sales declined by 5.8 per cent to $18,570 million from $19,708 million. The pharmaceutical sales in US of Merck & Co, AbbVie, AstraZeneca, Bristol-Myers Squibb declined during 2013. GSK registered highest growth of 27.3 per cent in pharma sales in US and its sales reached at $14,394 million. However, its sales in China declined in China due to ongoing investigation. The US pharma sales of Sanofi and Teva Pharma remained flat
The research and development (R&D) expenditure of Pharmabiz sample of 15 companies increased slightly by one percent to $84,664 million during the year ended December 2013 from $83,860 million in the previous year. The R&D expenditure of Pfizer declined by 10.7 per cent to $6,678 million from $7,482 million and that of AstraZeneca declined by 8 per cent to $4,821 million from $5,243 million. Similarly, Roche and Bristol-Myers Squibb also registered lower R&D expenditure during 2013. Amgen has achieved higher growth of 20 per cent in R&D expenditure at $4,083 million and Novartis R&D expenditure increased by 5.6 per cent to $9,852 million. Novo Nordisk also incurred higher R&D expenditure of $2,165 million, a growth of 12.1 per cent.
The selling, marketing, administration and other expenditure of these 15 companies increased only by 2.3 per cent to $162 billion during the year ended December 2013 from $159 billion in the previous year. AstraZeneca's selling, marketing, administration and other expenses increased by 24.1 per cent to $12,206 million from $9,839 million and that of Novo Nordisk went up by 12.7 per cent to $4,964 million. However, these expenditure of Bristol-Myers Squibb, Eli Lilly & Co, GlaxoSmithKline and Merck & Co declined during 2013. Further, Roche and Sanofi incurred same level of selling, marketing and administration expenditure during 2013.
The operating profit of 15 companies increased only by 2.1 per cent to $122.4 billion from $119.9 billion in the previous year. Pfizer registered strong growth in operating profit of 39.8 per cent to $15,716 million and Roche notched up operating profit growth of 19 per cent to $18,390 crore. The operating profit of AstraZeneca declined sharply by 54.4 per cent to $3,712 million from $8,148 million and that of Merck's declined by 36.5 per cent to $5,545 million from $8,739 million. Similarly, the operating profit of Sanofi and Teva Pharma declined by 17.3 per cent and 25.2 per cent to $7,029 million and $1,649 million respectively. Novartis also suffered setback and its operating profit declined by 2.5 per cent to $10,910 million.
Net profit after taxation and adjustments improved by 10.7 per cent to $106,028 million basically due to adjustments of restructuring of activities. For instance, Pfizer's net profit increased by 51 per cent to $22,003 million from $14,570 million due to disposition of its animal health business (Zoetis) during 2013 for a consideration of $10,662 million. The net profit of Novo Nordisk jumped by 66.1 per cent to $4,648 million as compared to $2,799 million despite warning letter from US FDA and recall of few batches of NovoMix insulin in some European countries. AstraZeneca's net profit declined sharply by 61.6 per cent to $2,458 million from $6,405 million due to loss of exclusivity for several key brands and negative impact of US healthcare reforms. The net profit of Merck and AbbVie declined by 28.3 per cent and 21.7 per cent respectively during 2013 and that of Sanofi and Teva Pharma by 20.8 per cent and 35.4 per cent respectively.
The sales of 105 blockbuster products with sales above dollar one billion improved by 3.5 per cent to $245 billion during the year ended December 2013 from $236 billion in the previous year. AbbVie's Humira for the treatment of rheumatoid arthritis maintained its leading position among the 105 blockbuster products with sales of $10,659 billion as against $9,265 billion. GSK's Seretide/Advair and Sanofi's Lantus also maintained there ranking at second and third position with sales of $8,696 million and $7,867 million respectively. Roche's Avastin moved to fourth place from fifth with sales of $7,023 million and its Herceptin brand went down to fifth position with sales of $6,826 million.
The sales of Novartis' Gilenya increased by 61.8 per cent to $1,934 million from $1,195 million and the product reached at 37th rank from 78th in the 2012. Amgen's Xgeva/Prolia posted net sales growth of 44.5 per cent to $1,763 million during 2013 and the product moved to 44th position from 77th in the last year. J&J Zytiga for treatment in oncology registered sales growth of 76.7 per cent to $1,698 million and moved to 46th place from 97th in the 2012. J&J's Stelara, Bristol-Myers' Orencia, Novartis' Afinitor/Votubia and Bayer's Xarelto products improved there sales significantly and grab upper slot in ranking.
J&J's Zytiga product for oncology treatment entered into blockbuster list in 2013 for the first time with sales of $1,698 million. Similarly, Novartis' Afinitor/Votubia for oncology treatment with sales of $1,309 million. Bayer's Xarelto, for the risk of stroke and blood clots, Novartis' Tasigna, J&J' Invega Sustenna for Neuroscience, Novartis' Galvus, a franchise product, Roche Actemra/RoActemra for immunology, Amgen' Sensipar/Mimpara for HPT, GSK's Augmentin for anti-bacterials, Sanofi's Renagel and Renvela and Amgen Xgeva entered the blockbuster list during 2013.
The sales of Lipitor, which recorded highest sales of $12,765 million in 2009, has declined sharply by 41.4 per cent to $2,315 million in 2013 from $3,948 million in the previous year. Other important products like Novartis' Dovan, Bristol's Abilify, Pfizer's Viagra and Norvasac, AstraZeneca's Seroquel, Merck's Singulair, Cozaar/Hyzaar and Vytorin, Roche' Pegasys, Bayer's Betaferon/Betaseron, Nexavar and YAZ/Yasmin, J&J's Procrit/Eprex, Sanofi's Aprovel and Eli Lilly's Zyprexa lost heavily during 2013 and there ranking also declined significantly.
Over the years, few important products like Zoladex and Atacand (AstraZeneca), Kaletra and TriCor/Trilipix (AbbVie), Concert Amethyl Phenidate (J&J), Zometa (Novartis) and Eloxatin (Sanofi) lost blockbuster status during 2013. Similarly, few more products are facing same problem on account of patent expiration in the current year.
Though the year 2013 was challenging one for world pharmaceutical giants, the investments in R&D, restructuring, cost cutting measures, product pipeline, tie-ups, consolidation and higher demand from emerging markets will assist well in the current year.
International Pharma Companies