Though the Research and Development (R&D) expenditure of 15 major international players increased by 8.2 per cent to US$ 41.06 billion during the first half ended June 2011 from $37.94 billion in the corresponding period of last year, not many products are likely to emerge as blockbusters, the key factor for growth in profit margins. The diminishing returns from R&D investment and failure in bringing new blockbuster products will be a major cause of concern for pharma players.

More and more products are losing their status as blockbusters and very few are entering into the blockbuster list despite such huge spending on R&D. Though the R&D expenditure of major 15 companies moved up by 15.5 per cent to $88.60 billion during the year ended December 2010, the list of new product launched during last couple of years has not shown any promising trend.

The recessionary economic conditions prevailing in Europe and US is putting  pressure and this may aggravate the problem of slowdown in global drug discovery. The pharma majors are taking steps to boost R&D returns and restructuring their activities in a big way, including R&D collaborative arrangements to develop new drug candidates.

It is interesting to see that the expiration of patent and competition have adversely impacted the sales of several products during 2010. Few important products like Tamiflu (Roche), Valtrex, Avandia Relenza and Augmentin of GSK, Eloxatin of sanofi-aventis, Pulmicortt and Losec/Prilosec of AstraZeneca, Topamax of  Johnson & Johnson, Sifrol/Mirapex of Boehringer Ingelheim, and Gardasil and Fosamax Merck & Co lost their blockbuster status during 2010. Pfizer's acquisition of Wyeth helped few products like Prevnar/Prevenar, Enbrel, Effexor, Sutent and Premarin Family entered into blockbuster list during 2010. Further, Merck & Co's Isentress, J&J's Velcade and Novartis' Exelon/Exelon Patch entered the blockbuster list during 2010. Based on the first half performance, several other blockbuster products may face problems in second half of 2011.

R&D expenditure as percentage of pharmaceutical sales of 15 companies remained unchanged at 17.8 per cent during first half of 2011 whereas the R&D expenditure of Pfizer, Merck & Co and GSK declined during the first half of 2011.

Pfizer's R&D spending declined by 1.7 per cent to $4.33 billion during the first half ended June 2011, primarily due to savings associated with its cost reduction and productivity initiatives. The company's 25 projects were in the phase III as on August 11, 2011, 31 projects were in phase II and 37 projects were in phase I. It has discontinued 14 projects since May 2011. The research projects includes 79 NMEs plus 24 additional indications.

The R&D expenditure of AstraZeneca touched to $2.36 billion with a growth of 2.1 per cent during the first half of 2011. Its pipeline now includes 88 projects in the clinical phase of development. There are 9 New Molecular Entities (NME) projects currently in late sage development, either in phase III or under regulatory review. During the first half, its 15 projects have successfully progressed to their next phase (including 6 projects entering first human testing); 14 projects have been withdrawn.

Novartis' R&D expenditure jumped by 16.7 per cent to $4.58 billion during the first half ended June 2011 and it received four approval from US FDA and filed two new products. It filed an application in the EU for its in-licensed Janus kinase inhibitor INC-424 to treat patients with myelofibrosis, a life-threatening blood cancer characterized by bone marrow failure and debilitating symptoms.

Though the GSK R&D expenditure declined by 12.9 per cent to $3.09 billion in the first half of 2011, the company is set to read-out data on 15 phase III assets by the end of 2012 and by the end of 2012 it expect more than 30 further phase III read-outs. The company filed Votrient for sarcoma in the USA and Europe and received data from two phase III 6 month Relovair studies which support ongoing development in COPD. GSK's total sales of new product launch since beginning of 2007 and excluding pandemic vaccine were Pound 581 million and grew by 53 per cent. It is launching three new products viz;, Benlysta, Trobalt and Horizant in near future.

Eli Lilly and Company has pushed its R&D investment by 7.1 per cent to $2.38 billion during the first half of 2011 and its R&D investments support clinical pipeline of 70 potential new medicines. Roche has achieved impressive progress in late-sage pipeline and its seven out of seven clinical trials deliver positive data to support regulatory submissions for new medicines or new indications for existing products.

With the number of positive phase III trial results, sanofi-aventis is set to file 6 products viz., Kynamro, Visamerin/Mulsevo, Aubagio, Zaltrap, Lyxumia and Lemtrada during 2011. At the end of July 2011. Sanofi's R&D portfolio comprises 65 NME projects and vaccines in clinical development of which 17 are in phase III or have been submitted to the health authorities for approval. Sanofi's R&D expenditure for the first half ended June 2011 increased by 19.5 per cent to $3.30 billion.

The pharmaceutical sales, including vaccines, of 15 companies viz., Pfizer, Novartis, Sanofi-aventis, Roche Group, Merck & Co, GSK, AstraZeneca, Johnson & Johnson (J&J), Eli Lilly & Co, Bayer, Abbott, Bristol-Myers Squibb (BMS), Teva Pharmaceutical, Amgen and Baxter International increased by 8.5 per cent to $231 billion in the first half of 2011 from $213 billion in the similar period of last year. The pharmaceutical sales of Pfizer, GSK and AstraZeneca declined by 23 per cent, 4.3 per cent and 0.2 per cent to $28.86 billion, $17.15 billion and $16.72 billion respectively. Pfizer remained on top in ranking of pharmaceutical sales and followed by Novartis, sanofi-aventis, Roche and Merck.

The net profit of these 15 companies increased by 13.2 per cent to $55.71 billion during the first half ended June 2011 from $49.22 billion in the same half of last year. The net profit of J&J declined by 21.6 per cent to $6.25  billion from $7.97 billion, Eli Lilly by 13.3 per cent to $2.25 billion from $2.60 billion, Teva Pharmaceutical by 11.2 per cent to $1.35 billion and that of Amgen by 2.7 per cent to $2.54 billion.


International Pharma Cos Half year ended June 2011 & 2010