The
global prescription pharmaceuticals market was estimated to be USD 1,114
billion in 2015. The market is mature and highly consolidated. The top-10
pharmaceutical companies in this market had share of over 30% in 2015. These
companies are large and established organizations that are primarily located in
U.S. and Europe. They offer drug products for a very wide range of therapeutic
areas. Furthermore, these organizations are the powerhouses of research and development
in life sciences. The combined R&D expenses of these ten companies
outstrips the R&D budgets for life science research in public sector.
A
comparative analysis of the top-10 organizations was used to develop a ranking
for these companies. The ranking model incorporated six criteria for each
organization: revenues, contribution of top-3 drug products to the revenues,
annual growth, investment in R&D, expenses and income, and revenue per
employee. A score statistic was developed based on these six criteria. Each
organization was assigned a score for each of these six criteria. A weighted
sum of six criteria was used to arrive at the final score statistic.
Total
revenue received the highest weight (40%) while revenue per employee received
the lowest weight (6%). The score statistic represented the financial health,
strength of R&D, and diversity of product portfolio of each organization.
1.
Johnson
& Johnson (U.S.)
Johnson
& Johnson (U.S.) is the top-ranked organization in this list. The company
had the highest revenues in 2015. Its pharmaceuticals division contributed to
44.85% of its revenues in 2015. The company had one of the largest R&D
budgets in 2015. However, the most important reason for its high rank is the
diversity of its product portfolio – the contribution of its top-3 drugs to the
pharmaceutical revenues (35.84%) was one of the lowest in this list. Remicade,
Stelara, and Zytiga were the top-3 drugs for this company in 2015. The combined
revenue of these three products was USD 11,266 million in 2015.
2. Hoffmann-La Roche AG (Switzerland)
Hoffmann-La
Roche AG had revenues of USD 50,111 million in 2015. Its pharmaceuticals
segment contributed to 77.54% of its revenue in 2015. The company had the
highest R&D expenses in 2015 – USD 9,972 million. However, the company’s
product portfolio is narrow. Avastin, Herceptin, and Rituxan were the top-3
drugs for Roche in 2015. They contributed to 50.53% of the company’s revenue in
2015. All these three products are related to oncology. Furthermore, the patens
of these three products is about to expire by in a few years (2016 for Avastin
and Herceptin and 2019 for Rituxan). This will expose the company to
competition from biosimilars.
3. Pfizer Inc. (U.S.)
Pfizer
Inc. had revenue of USD 48,851 million in 2015. The companies R&D expenses
were USD 7,690 million in 2015. The top-3 drugs products of the company
contributed 27.09% to the company’s revenue in2015. Pfizer had one of the lowest
ratios of the proportions of revenue from its top-3 drugs to total revenue,
indicating a healthy product portfolio. Furthermore, its highest-selling drug,
Prevnar, has patent expiry horizon of 2026, which would help the company
maintain its market position.
4.
Novartis
AG (Switzerland)
The
total revenue for Novartis AG was USD 49,414 million in 2015. The company’s
revenues declined by 5.30% over the previous year. The company invested USD
8,935 million in R&D in 2015. The company also has a diverse product
offering, with the top-3 drug products contributing only 31.18% to the
company’s pharmaceutical revenues in 2015. The company’s top-3 drugs in 2015
were Glivec, Gilenya, and Lucentis. The combined sales of these 3 products was
USD 9,494 million in 2015.
5.
Bayer
AG (Germany)
Bayer
AG is the only German company in this list. Though its total revenues were
higher than those of Roche, Pfizer, and Novartis, the revenues of its
pharmaceuticals segment was low – USD 15,253 million in 2015. The ratio of the
proportion of revenue from its top-3 drugs to total revenue was one of the
lowest for Pfizer – 33.72% in 2015.
6. Merck & Co., Inc. (U.S.)
Merck
& Co., Inc. had total revenue of USD 39,498 million in 2015. The company’s
pharmaceuticals division contributed to 88.06% of this figure in 2015. The
company invested USD 6,704 million in R&D in 2015, which in relation to its
revenue was one of the highest. Furthermore, the contribution of top-3 drugs to
revenue was one of the lowest for Merck (24.55% in 2015), second only to the
ratio for GSK.
7.
GlaxoSmithKline
plc (U.K.)
GlaxoSmithKline
plc is the first U.K-based company in this list. It had total revenues of USD
36,566 million in 2015. The company invested USD 5,441 million in R&D in
2015. The company had the lowest ratios for the contribution of top-3 drugs to
its revenues – 21.50% in 2015.
8.
Sanofi
(France)
Sanofi
is the only French company in this list. It was also one of the two companies
in this list with positive growth rates in 2015. The company’s revenues grew by
8.99% between 2014 and 2015 to reach USD 34,542 million in 2015. The company
invested USD 5,092 million in R&D in 2015. Furthermore, revenues its top-3
products – Lantus, Plavix, and Lovenox – contributed only 29.06% to its
revenues in 2015. However, the patents of all three products has expired as of
2014, and the company needs to rapidly expand and diversify its product
offering.
9. Gilead Sciences, Inc. (U.S.)
Gilead
Sciences, Inc. had the highest growth rates in 2015. The company grew by 31.13%
between 2014 and 2015, to reach USD 32,639 million in 2015. The company
invested USD 3,014 million in R&D in 2015. Its top-3 drugs – Harvoni,
Sovaldi, and Truvada – contributed 55.48% of its revenues in 2015. This ratio
too is the highest amongst its peers in this list. However, the patent-expiry
horizons for all three products are substantially long (2030 for Harvoni, 2029
for Sovaldi, and 2021 for Truvada), which would help sustain the company’s rapid
growth.
10. AstraZeneca plc (U.K.)
The
revenue for AstraZeneca plc was USD 23,641 million in 2015. The company
invested USD 5,997 million in R&D in 2015. The company’s R&D
investments in relation to its revenue was the highest amongst all companies in
this list. The company’s strategy to invest in R&D is critical to its
growth as its top-3 drugs – which contributed 46.14% to its revenue in 2015 –
are fast approaching patent expiry. Crestor’s and Nexium’s patents expire in
2016 while Symbicort’s expires in 2017.
