The top 15 global pharmaceutical companies suffered a major setback in their working during the year ended December 2010. The operations of these companies affected mainly on account of stiff competition from generics, expiry of their patented products, restrictive healthcare policies and failure in creating breakthrough drugs, as per a Pharmabiz study.
Although the global economy recovered from the deep recession somewhat quickly during 2010, higher restructuring and acquisition costs, research and development expenditure and litigation charges put additional burden on overall working of these companies.
The aggregate worldwide revenues from pharmaceuticals, generics, vaccines, diagnostics, consumer healthcare, nutritional products and animal healthcare, of 15 global pharma companies increased by 11 per cent to US$ 567 billion during the year ended December 2010 from $ 511 billion in the previous year. This was mainly on account of significant higher sales by Pfizer and Merck & Co with merger of Wyeth and Schering-Plough respectively. The aggregate revenues of Pfizer went up by 36 per cent to $68 billion and that of Merck moved up by 68 per cent to $46 billion in 2010. For better comparison, Pharmabiz study has converted all currencies into US Dollar at a constant exchange rate as at the end December 2010 and 2009.
The aggregate revenues, in terms of US dollar, of sanofi-aventis, GlaxoSmithKline and Johnson & Johnson declined by 4.1 per cent, 2.8 per cent and 0.5 per cent respectively to $40 billion, $44 billion and $62 billion during 2010. Abbott Laboratories, Novartis International, Takeda Pharmaceutical Co and Teva Pharmaceutical have registered growth of over 14 per cent in aggregate revenues. All other companies viz., Amgen, AstraZeneca, Bayer, Bristol-Myers Squibb, Eli Lilly and Co and Roche Group registered revenue growth in the range of 1-6 per cent during 2010.
The net profit of 15 global companies declined sharply by 20.1 per cent to $85,955 million in 2010 from $107,595 million in the previous year with major setback for Merck, Bristol-Myers and GlaxoSmithKline (GSK). The net profit of these three companies declined in the range of 68-93 per cent. Further, net profit of Abbott Labs, Bayer, Pfizer, sanofi-aventis and Takeda Pharmaceutical declined in the range of 4-19 per cent in 2010. The net profit of Amgen improved marginally by 0.5 per cent to $4,626 million.
Teva Pharmaceutical, which entered for the first time in Pharmabiz study, has recorded 67 per cent growth in net profit to $3,331 million as against $2,000 million. Eli Lilly and Novartis have posted relatively better growth in profits of 17.1 per cent and 17.9 per cent to $5,070 million and $9,969 million during 2010. Roche also earned a net profit of $9,450 million, a growth of 15.3 per cent. Johnson & Johnson, and AstraZeneca managed to pushed there bottom line by over 8 per cent.
The net profit of Merck declined sharply by 93.3 per cent to $861 million from $12,899 million in the previous year mainly on account of gains recognized in 2009 with merger of Schering-Plough. Further, the Vioxx liability reserve, restructuring cost of $985 million and impact of US health care reform legislation also put pressure. Bristol-Myers' net declined in 2010 mainly due to income from discontinued operations of $7,373 million in the 2009 which resulted from the split-off of Mead Johnson in 2009. However, its operating profit moved up by 8.4 per cent to $6.071 million.
GSK's aggregate revenues declined by 2.8 per cent to $43,917 million from $45,178 million in the previous year mainly due to US healthcare reform and EU government austerity measures, which reduced its sales by $588 million. Further, the 'washout' of pandemic products, Avandia and Valtrex also adversely impacted its top line. The net profit of GSK declined sharply by 68.3 per cent to $2,866 million from $9,028 million as its cumulative restructuring cost worked out to $5,568 million for the year 2010.
The cost of production of 15 companies increased by 16.6 per cent to $172 billion during 2010 and their selling, marketing & administration cost moved up 12.3 per cent to $175 billion from $ 156 billion in the previous year. R&D expenditure went up by 15.5 per cent to $89 billion from $77 billion. However, the provision for taxation declined by 11.3 per cent to $23 billion from $26 billion.
The pharmaceutical sales, including generics and vaccines, of the Pharmabiz sample of 15 companies increased by 10.4 per cent to $430 billion from $390 billion in 2009. Due to mergers and acquisition, there was major shifting in ranking of companies based on pharmaceutical sales. Pfizer maintained its leading position with pharmaceutical sales of $58,523 million, after taking into consideration sales of Wyeth. Novartis jumped to second spot with pharma sales of $42,478 million. Merck, with merger of Schering, reached to third rank from seventh in the 2009, recording pharma sales of $39,811 million. Sanofi-aventis lost its second position and went down to fifth spot with sales of $37,325 million and GSK from fourth to sixth spot with sales of $36,167 million. Johnson & Johnson and Eli Lilly maintained there ranking in 2010. Teva has overtaken to Takeda Pharma, Amgen and Bayer and grabbed 12th position with pharma sales of $16,121 million as against 15th in the last year.
The pharmaceutical sales in United States increased only by 3.4 per cent to $185 billion from $180 billion in the previous year. Pfizer's sales in US increased by 29.7 per cent to $25,962 million from $20,010 million. Teva also managed to push its US sales by 16.3 per cent to $9,988 million. Novartis and Abbott also posted 12 per cent sales growth in US. However, Merck, sanofi-aventis, GSK, AstraZeneca, J&J, Takeda Pharma and Bayer received setback in US. Roche, Eli Lilly, Bristol-Myers and Amgen managed single digit growth in US market.
There were 98 blockbuster products with sales of over one billion dollar in 2010 as against 99 products in the previous year. The total sales of these 98 blockbusters increased by 6.6 per cent to $247 billion from $232 billion in the previous year. Six new products, viz., Effexor, Sutent and Premarin family (all from Pfizer), Isentress (Merck), Velcade (J&J) and Exelon/Exelon patch (Novartis) entered the blockbuster list during 2010. However, 10 products lost blockbuster status which includes Valtrex, Avandia, Relenza and Augmentin (all from GSK), Fosamax and Gardasil (Merck), Tamiflu (Roche), Eloxatin (Sanofi), Pulmicortt (AstraZeneca) and Topamax (J&J). The revenues from these 10 product declined to $8,358 billion from $15,780 billion in the previous year mainly due to intense generic competition.
Pfizer's blockbuster Lipitor brand maintained its top position with sales of $10,733 million in 2010 as against sales of $11,434 million in the last year, a fall of 6.1 per cent. Seretide/Advair of GSK ranked at second spot with sales of $7,949 million as against $7,926 million. Roche's Avastin and MabThera/Rituxan moved up to third and fourth position with sales of $6,867 million and $6,756 million, recording a strong growth of 14.6 per cent and 15.2 per cent respectively. Plavix of Bristol-Myers lost its third position and went down to fifth rank with sales of $6,666 million.
The Research and Development (R&D) expenditure of Pharmabiz sample of 15 companies increased by 15.5 per cent to $88,609 million from $76,707 million in the previous year. The R&D expenditure of Merck increased sharply (after merger of Schering) by 88 per cent to $10,991 million from $5,845 million. Similarly, 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. However, the R&D expenditure of Bristol-Myers, Johnson & Johnson and sanofi-aventis declined in the range of 2-11 per cent during 2010. Pfizer's R&D expenditure increased by 20 per cent to $9,070 million.
The consumer healthcare sales of 15 companies increased by 7 per cent to $44,368 million from $41,472 million and that of Vaccines went up by 10.1 per cent to $14,715 million from $13,364 million. GSK's vaccines sales touched to $6,691 million from $5,902 million and that of sanofi-aventis reached at $5,046 million from $4,992 million. Novartis reported vaccine sales of $2,978 million as compared to $2,470 million.
The performance of 14 companies from Pharmabiz sample (excluding Takeda Pharma as its year ends in March) during the first quarter ended March 2011 was not upto the mark and the aggregate net profit declined marginally to $22,555 million from $22,606 million in the corresponding quarter of last year. The aggregate revenues improved only by 3.3 per cent to $140 billion from $135 billion, out of which pharmaceutical sales increased only by 1.9 per cent to $104 billion. Several companies reduced their projection in respect of top line, bottom line and EPS growth for 2011 on account of generic competition, loss of exclusivity, US healthcare reform, stringent approval systems, slower growth in US and Europe and adverse exchange rates. However, the focus on emerging markets, consolidation and cost cutting measures may help to improve financial working.
Table - Worldwide Pharma sales
Table - Net profit of 15 Companies
Table - R&D Expenditure in 2010
Table - Ranking of blockbuster products
Table - Loss of blockbuster status in 2010