Financial performances of top international pharmaceutical companies are expected to be dismal during the current year if their sales and profits during the first nine months are any indication. The Pharmabiz study of 15 of these top global companies including GlaxoSmithKline, Pfizer, Sanofi, Eli Lilly and Merck during nine months ended September 2014 shows a sharp decline in revenue mainly on account of poor sales of pharmaceuticals and vaccines. The total sales of these 15 companies in pharmaceuticals, vaccines, consumer health, diagnostics, and animal health products declined by 1.3 per cent to $375 billion during the nine months period of the current year from $380 billion reported in the same period of the previous year. The companies which suffered sharp drop in sales among the 15 companies during the first three quarters of 2014 are Pfizer, Sanofi, Merck, GSK, Eli Lilly, Bristol-Myers Squibb, Novo Nordisk and Bayer. Eli Lilly reported perhaps the worst decline of 18.8 per cent in sales during nine months period of 2014 at $12,781 million as against its sales of $15,731 million in the same period of previous year. In the case of GSK, pharmaceutical sales declined by 10.4 per cent in the current year so far to $22,085 million from $24,644 million in the previous year due to lower sales in US. Another major company, Bayer also reported a 12.3 per cent decline of pharma sales during the current year at $10,418 million from $11,872 million.
Along with a fall in sales, the net profit before tax of the 15 companies only grew by 3.9 per cent to $86,192 million from $82,959 million. Higher provision for tax impacted the bottomlines of these companies and profit after tax declined by 10.8 per cent to $68,145 million from $76,412 million. Pfizer suffered the worst drop in profit in the current year with its net profit declining by over 59 per cent to $7,907 million. GSK's net profit declined by over 41 per cent to $2,933 million from $5,033 million. Poor performances of global pharma companies in the current year so far comes after disappointing results in terms of sales and profits during the year ended December 2013. One of the key reasons for repeated poor performances of these companies is the patent expiries of many blockbusters during the last two years. Generic competition, lower sales in the US market, slow growth in European economy, limited outcome from R&D investments and cost cutting measures adopted in developed countries are other reasons. At the same time the R&D expenditures of top pharma companies continue to rise with no prospects of getting any blockbusters. R&D spending of these companies increased by 2.6 per cent to $55,223 million during the nine-month period of the current year from $53,815 million in the corresponding nine months of last year. Novartis’ R&D expenditure remained highest among the 15 pharma companies at $7,190 million and that of J&J the second highest at $5,859 million. Pfizer's R&D expenditure moved up by 6.5 per cent to $5,184 million from $4,867 million. Research expenditures of AstraZeneca and AbbVie increased by 16.9 per cent and 16.8 per cent respectively to $3,581 million and $2,742 million. Baxter, Novo Nordisk and Bristol-Myers also spent more for R&D during the current year.