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World's 15 leading pharmaceutical giants reported a 10 .5 per cent growth in sales at US$ 334 billion in 2006 as against $ 302 billion reported in the previous year. And the sales of pharmaceutical products in the US alone, the largest market in the world, went up by 12.4 per cent to $ 175 billion as compared to $156 billion in 2005. The pharma sales in 2005 of 15 giants grew only by 2.1 per cent over the previous year with negative growth in profitability.
The performance of the pharma giants during 2006 is better despite stiff competition, higher investment in R&D, changes in exchange rates and cuts in medical expenditure by several countries.
IMS Health, the world's leading provider of market intelligence to the pharmaceutical and healthcare industries, last week reported that the Global pharmaceutical market grew by seven per cent during 2006 and reached at $643 billion. The Pharmabiz sample of 15 companies with net sales of $334 billion works out to more than 52 per cent of the total pharma market size estimated by the IMS. While the IMS study says 7 per cent growth for the world pharma market, the Pharmabiz sample of 15 top companies shows much faster growth in sales of 10.5 per cent.
The Pharmabiz Study of 15 top companies namely Pfizer, GlaxoSmithKline plc, Sanofi-aventis, Roche, AstraZeneca plc, Johnson & Johnson, Merck & Co, Novartis, Wyeth, Eli Lilly & Co, Bristol-Myers Squibe Co, Amgen, Abbott, Bayer and Schering-Plough, revealed that the aggregate net profit increased by 25.6 per cent to $94 billion from $75 billion in the previous year. The significant growth is mainly due to strong performance by Pfizer and Schering-Plough with net profit growth of over 100 per cent. Further, Eli Lilly, GlaxoSmithKline (GSK), AstraZeneca, Roche and Sanofi marked a growth over 20 per cent during 2006 in net profit. However, the net profit of Abbott, Amgen, Bristol-Myers, Merck & Co declined during 2006. The growth in net profit of almost same sample of companies during 2005 was only 7.9 per cent.
Pfizer maintained its top position in the world with pharmaceutical sales of $45,083 million during 2006 as compared to $44,269 million in the previous year. The sales growth was restricted to only 1.8 per cent. GSK ranked second with pharma sales of $ 39,335 billion (a strong growth of 22.5 per cent) followed by Sanofi-aventis at $ 34,116 million (5.5 per cent). Roche climbed to fourth place among the top 15 companies with pharma sales of $27,318 million as against its previous ranking at 7th place with sales of $ 20,728 million. AstraZeneca lost its 4th rank and went to 5th place with pharma sales of $26,475 million. Pharmaceutical sales of Bristol-Myers and Abbott declined during 2006 to $ 13,861 million (-9.1 per cent) and $ 13,104 million (-1.4 per cent) respectively.
Pharmabiz study has taken into consideration only Pharmaceutical product sales and not included sales from Consumer Healthcare, Nutritional, Diagnostics Vaccines, Animal Healthcare and other chemicals. And different currencies were converted at constant rate as at the end of 2006 and 2005. One British Pound was equal to $1.96 as at the end of December 2006 ($1.72 in the previous year); One Euro was quoted at $1.32 ($1.18) and one Swiss Franc at $0.82 ($ 0.76).
The total gross sales of 15 companies touched to $4, 43,817 million during 2006 as against $3, 97,642 million in the previous year, a growth of 11.6 per cent. However, the pharmaceutical sales as per cent of total sales worked out to 75.2 per cent as compared to 75.9 per cent in the previous year. Pfizer's total sales amounted to $48,371 million and that of Johnson & Johnson worked out to $53,324 million as against $50,514 million. Similarly, Bayer achieved gross sales of $38,230 million during 2006, but its pharmaceutical sales worked out to $9,873 million and contributed only 26 per cent of its total sales.
The pharmaceutical sales in USA of Pfizer increased only by 4.4 per cent to $ 24,503 million from $23,471 million in the 2005. GSK pushed its sales in US by 29.4 per cent to $20,283 million as against $ 15,670 million in the previous year. Roche and Sanofi also achieved better sales growth in US of 33.7 per cent and 16.1 per cent respectively. Bayer Group's sales in US jumped by 120 per cent to $2,939 million from 1,337 million on account of acquisition of Schering AG, Berlin, Germany. The last company in Pharmabiz sample of leading 15 pharma companies was Schering-Plough with pharma sales of $8,561 million. It's US pharma sales improved by 23.5 per cent to $2908 million in 2006. The pharmaceutical sales in US of Abbott declined sharply to $ 6,550 million from 8,138 million, a fall of 19.5 per cent and that of Bristol-Myers declined by 5.9 per cent to $ 8,347 million during 2006.
The 15 new pharmaceutical products entered the list of 103 blockbusters, with net sales of over one billion dollar, during 2006.The aggregate sales of these 103 blockbusters improved by 16 per cent to $220809 million from $190392 million in the previous year. The net sales of 103 blockbusters contributed 66.2 per cent of total sales of pharmaceutical sales of 15 companies during 2006 and 63.1 per cent in the year 2005. While ranking 103 products, the study included products of few companies like Takeda, Genentech, Teva Pharma and Boehringer Ingelheim, which do not figure in the study due to their lower pharmaceutical sales size.
View Table 4 Pharma Blockbuster Products : 2006& 2005 Information
GSK has largest number of blockbusters at 11 during 2006, while AstraZeneca and Pfizer has 10 each followed by Sanofi at nine, J&J at eight and Roche seven. Abbott, Amgen, Novartis and Wyeth remained with five products each in the list of 103 blockbusters.
Lipitor of Pfizer maintained its highest position among the blockbusters with net sales of $12,886 million during 2006 as against $ 12,187 million in the previous year. Lipitor is the only product with net sales of over $ 10 billion and sales increased by 5.7 per cent. Seretide/Advair of GSK is on the second spot with sales of $6,491 million in 2006 as compared to $5,168 million in the last year. Sales of Seretide/Advair went up sharply by 25.6 per cent. AstraZeneca's Nexium maintained its third rank in list of 103 blockbusters with sales of $5,182 million as compared to $4,633 million, a double digit growth of 11.8 per cent.
There were total 41 pharmaceutical products with net sales of over dollar two billion during 2006 as against 27 products in the previous year. Among the 103 top products, the net sales of 11products i.e. Plaviz and Pravachol(Bristol-Myers), Eprex/Procrit, Duragesic and Hormonal Contraceptives (J&J), Fosamax and Zocor (Merck & Co), Zoloft (Pfizer),Losec/Prilosec (AstraZeneca), Neupogen (Amgen) and Augmentin (GSK) declined during the year 2006.
There was significant growth of over 50 per cent in sales of products like Herceptin (97.5 % - Roche), Avastin (91.9% - Roche), Tamiflu (82% - Roche), Lantus (53% - Sanofi), Crestor (59.9% - AstraZeneca), Betaferon/Betaseron (96.1% - Bayer), Avastin (54.1% - Gentech), Yasmin/YAZ (136.7 % Bayer), Coreg (54.8%- GSK), Cymbalta (93.5%- Eli Lilly), Herceptin (65.2%- Gentech), Lyrica (297% - Pfizer) during the year 2006.
The sales of 103 blockbusters in US increased by 15 per cent to $125388 million during 2006 from $ 109080 million in the previous year. The US sales of products by Bayer were not available and not included in total. Lipitor of Pfizer was the top selling pharmaceutical product in USA with sales of $7,849 million as against $7,401 million. The sales of Seretide/Advair of GSK recorded sales growth of 26.2 per cent in USA. Roche's four products MabThera/Rituxan, Herceptin, Avastin and Tamiflu are moving fast in US. Tamiflu sales went up by 148.5 per cent to $ 748 million in US and that of Herceptin moves up by 78.2 per cent $1,269 million in US.
With stiff competition in the international market every player is trying hard to spread its operations. The leading 15 companies invested huge funds in Research and Development (R&D) during 2006 and their R&D investment as per cent of total sales worked out to 15.1 per cent during 2006 as against 14.3 per cent in the last year. The aggregate investment in R&D of these companies increased by 17.8 per cent to $66,933 million from $ 56,837 million in the previous year.
Except Eli Lilly & Co and Pfizer, all other companies investment in R&D increased by double digit during 2006. Amgen has invested $3,366 million on R&D, a significant growth of 45.5 per cent. GSK's investment in R&D went up by 25.5 per cent to $6,773 million and that of J&J's increased by 10.3 per cent to $7,125 million. Considering the investment, the new product launch is very slow and putting some pressure on earnings.
The World pharma leaders are also spending huge amounts on marketing and it is interesting to note that these companies are spending more on marketing than on R&D. The aggregate expenditure on marketing by 15 Pharmabiz sample companies reached at $135399 million during 2006 as compared to $123530 million in the previous year, a growth of 9.6 per cent. The marketing expenditure as percentage of total sales of these companies, thus, worked out to 30.5. As against this, the R&D spends as percentage of total sales of these giants worked out to just 15.1.
The IMS study pointed out that growth in the R&D pipeline remains strong and at the end of 2206 some 2,075 molecules were in development, up 7 per cent from 2005 level. The R&D expenditure of Pharmabiz sample of 15 companies also went up by 17.8 per cent and several products are in the phase II and phase III stages. Almost all the companies in the sample projected higher earning per share during 2007.
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