The financial performances of world’s top 15 pharmaceutical companies during 2010 indicate a gloomy prospects for these well established leaders of this once prosperous industry. Both sales and profits of these powerful brand companies are on the decline mainly on account of expiration of patents and withdrawal of many drugs from the market over the years. This trend is going to continue in the years to come as well with continuing patent expiries and very few new blockbusters entering the market. A Pharmabiz study of the performances of top 15 global companies shows that their profits declined sharply by 20.1 per cent to $85,955 million in 2010 from $107,595 million in the previous year. Amongst these companies, major setback was to Merck, Bristol-Myers and GlaxoSmithKline. The net profit of these three companies declined in the range of 68 to 93 per cent. Companies like of Abbott Labs, Bayer, Pfizer, Sanofi-Aventis and Takeda Pharmaceutical also suffered a drop in their net profit in the range of 4-19 per cent in 2010. Perhaps the worst affected is Merck with a 93.3 per cent decline in profit at $861 million from $12,899 million in the previous year. One of the main factors for this setback is on account of Vioxx liability reserve in its balance sheet. In the case of GSK, although sales declined by only 2.8 per cent, its profit went down 68.3 per cent to $2,866 million in 2010 from $9,028 million in the previous year. Withdrawal of Avandia by GSK due to its serious adverse effects from the world markets did affect the company quite seriously.

What is to be noted during 2010 is the excellent performances of world’s two large generic companies portending a new trend in the global pharmaceutical scene. The Israel based Teva Pharmaceutical registered a 67 per cent growth in net profit at $3,331 million during 2010 as against $2,000 million in 2009. The other generic major, Novartis, also posted a net profit growth of 17.9 per cent at $9,969 million during 2010. Huge spurt in sales of Teva and Novartis is a clear indication that major pharmaceutical markets are increasingly opting for generic drugs now. And because of this growing shift towards generics, ten products namely Valtrex, Avandia, Relenza and Augmentin (all from GSK), Fosamax and Gardasil (Merck), Tamiflu (Roche), Eloxatin (Sanofi), Pulmicortt (AstraZeneca) and Topamax (J&J) lost their blockbuster status during 2010. The revenues from these products declined sharply to $8,358 billion in 2010 from $15,780 billion in the previous year. The main problem confronted by the global pharmaceutical companies is their inability to get new blockbuster drugs in place of expiring ones for some years. There were 98 blockbuster products in 2010 as against 99 products in the previous year. The total sales of 98 blockbusters increased only by 6.6 per cent to $247 billion in 2010 from $232 billion in the previous year. Only six new products entered the blockbuster list during 2010. At the same time, R&D expenditure of these companies shows no drop. The R&D expenditure of 15 top companies increased by 15.5 per cent to $88,609 million from $76,707 million in the previous year. During 2010, research expenditure of Merck went up by 88 per cent to $10,991 million from $5,845 million. Abbott's R&D spending increased by 35.8 per cent to $3,725 million and that of Novartis increased by 21.4 per cent to $9,070 million. In case of Pfizer, R&D expenditure increased by 20 per cent to $9,070 million. These facts show that there is something wrong with R&D establishments of world’s top pharmaceutical companies. The credibility is at stake and it is high time global pharmaceutical companies thought what needs to be done to find new drugs for  growing number of new diseases.