World ranking of pharmaceutical companies

Sergey Obukhov

Based on the results of 2003, Western analysts prepared another report on the work of the largest pharmaceutical companies, placing each in a place corresponding to its merits. The rating showed both winners and losers. Overall, the news is good: for the first time, all companies from the TOP 50 list have surpassed 1 billion in sales of prescription drugs. This was partly facilitated by positive economic changes in the global market in general and the pharmaceutical market in particular.

World pharmaceutical market

According to IMS Health, the prescription drug market grew 9% from 2002 to $466 billion.

In contrast to 2002, market volumes in all regions increased (Fig. 1). Latin America showed a 6 percent increase compared to a 10 percent decrease in 2002. The fastest growing markets are in European countries that were not members of the European Union in 2003. Despite the fact that the share of the countries of Central and Eastern Europe is still insignificant, their rapid growth cannot go unnoticed by the largest players. So far, local companies in European countries that have joined the EU occupy quite strong positions. And in four of them they are leaders.

Traditionally, in Central and Eastern European countries, most international pharmaceutical companies promote medicines based on local demand and their importance to the company. But the structure of morbidity and, as a consequence, prescribed drugs in countries such as Poland, Hungary, the Czech Republic, Slovakia, Slovenia, as well as in the Baltic republics, is quickly approaching the structure of the Western market. And this, in turn, will make the region even more attractive. It can be assumed that similar processes will occur in countries that are not currently members of the EU.

About half of global sales come from the North American market. It is not difficult to calculate: in order to occupy a strong position in world rankings, it is necessary to have a good position in the largest market. And 94% of the North American market is the US market. Owning 2% of the US market, the company owns almost 1% of the global market (Figure 2). Moreover, the American market is one of the fastest growing. Accordingly, one of the options for gaining and maintaining leadership in the global market may be to merge with companies that have good positions in the United States.

Together, the Top 50 companies sold approximately $348 billion in products, representing 74.7% of all prescription drug sales. For comparison: in 2003, the share of the 50 largest companies was 80.5%. This change indicates a process of market fragmentation. As can be seen from Table 1, no company owns a share of more than 10%. Only two companies “hold” 5% of the market and more than half of the companies from the TOP 50 list have a market share of less than 1%.

Table 1. Top 50 companies by prescription drug sales in 2003

* The rating does not reflect the company's overall revenue. The data includes only sales of prescription drugs. Income from the sale of equipment, tools, drugs for animals, as well as over-the-counter drugs were not taken into account.

Pfizer deservedly occupies the first place in the ranking. Firstly, the merger with Pharmacia made it possible to achieve a 40% increase in turnover and beat its closest competitor, GlaxoSmithKline, by $10 billion. Secondly, Pfizer, whose sales are about $40 billion, spends $7.13 billion (about 18 % of revenue from sales of prescription drugs) for research and development of new drugs (Fig. 3). As a result, the company owns nine of the 66 drugs whose sales exceeded $1 billion, including the best-selling one (Figure 4, Table 2). And thirdly, Pfizer is the leader in advertising and promotion costs (Fig. 5, 6).

Table 2. 10 best-selling drugs

A number of companies have significantly improved their position. Amgen rose from 20th to 15th position in the ranking, Teva from 30th to 25th, Forest Labs from 38th to 32nd, Serono from 39th to 35th, Schwarz Pharma from 48th to 38th and Genzyme from 50th to 41st. There were also changes in the top ten: Johnson & Johnson rose to 4th position from 6th, displacing Aventis and AstraZeneca.

For others, 2003 was a difficult year. Schering-Plough, having lost a quarter of its sales, dropped from 14th to 17th place. Akzo Nobel moved from 22nd to 27th position. The ratings of several Japanese companies also dropped. The reason for this is considered to be a decrease in government reimbursements for medicines (Fig. 7).

The weak dollar also played a role in the ranking of companies in the TOP 50 and the assessment of sales growth. Several European companies (eg Aventis, Byer, Boehringer Ingelheim, Schering AG) finished 2003 better than the previous year. However, because on average 60% of their prescription drug sales are in the US market, reported sales data were lower than in 2002. And the growth calculation was based on data reported by the companies in local currency, after which the value was converted to US dollars at the average monthly rate for 2003

Therapy classes

In general, the TOP 10 therapeutic classes account for 30% of the global pharmaceutical market. At the same time, the largest segments are lipid-lowering drugs (6%) and antiulcer drugs (5%). And the fastest growing rates are anticonvulsants (+22%) and antipsychotics (+20%), which is reflected in Table 3.

Table 3. Sales of prescription drugs by therapeutic class

According to estimates by the international analytical company Evaluate Pharma, in 2017 the volume of the global pharmaceutical market reached $1,200 billion, which is 3.6% more than in 2016 ( picture 1).

Picture 1

Dynamics of development of the global pharmaceutical market in 2012-2017, billion US dollars

Source: Evaluate Pharma, 2017, World Preview 2017 outlook to 2022

Data are calculated based on manufacturer prices without taking into account discounts due to legislative reductions in selling prices

As before, the US pharmaceutical market not only remains a regional leader, but also determines the main trends in the development of the global pharmaceutical industry. In 2017, its volume increased by 4% and reached 456 billion US dollars. The fears of American pharmaceutical companies, which occurred in early 2017 and related to the introduction by the new President Donald Trump of measures aimed at curbing rising drug prices, were not confirmed. On the contrary, Trump appointed former Elly Lilly executive Alex Azar as Secretary of State for Health, from whom one can hardly expect decisive actions contrary to the interests of the pharmaceutical industry. U.S. Senator Ron Wyden assessed the American president's policies as follows: “At every step of his health care policy, Mr. Trump has broken the promises he made to American families to lower health care and drug costs and expand and provide widespread access to health care services.” in your oath." On the contrary, companies such as Celgene, AbbVie, Roche, Allergan, Amgen and Novo Nordisk even managed to significantly increase prices for their innovative drugs.

Until recently, everyone in the United States was waiting for the emergence of a new player in the prescription drug segment - the largest online retailer Amazon, which already sells medical products, nutritional supplements and over-the-counter drugs via the Internet. This event would mean the emergence of a powerful competitor to pharmacy chains and large wholesale companies such as CVS Health, Walgreens Boots Alliance, Express Script Optum Rx in the stationary retail segment. But Amazon abandoned plans to supply drugs to medical institutions. The company has been unable to convince large hospitals to change their traditional purchasing process, which is done through pharmaceutical distributors and has evolved over decades. Amazon's warehouse and logistics infrastructure, which is not designed to store and deliver temperature-sensitive drugs, was also a major obstacle. However, a scenario in which Amazon acts as an investor and creates its own network of retail outlets is still possible.

The Chinese pharmaceutical market firmly retained second place in the global rankings in 2017. Its volume reached 165 billion US dollars. At the same time, it is growing twice as fast as developed pharmaceutical markets. At the last congress of the ruling Communist Party, strategic goals for the development of Chinese society were announced. Among them: improving the quality of life and health of the population of the Middle Kingdom.

At the same time, the Chinese government is relying on reforms of the healthcare system such as expansion and decentralization of its infrastructure. It intends to introduce new, increased requirements for the registration of medicines and change the pricing system for medicines, taking into account pharmacoeconomics.

Since the share of foreign suppliers in China's drug supply is only 25%, global pharmaceutical companies have great prospects for expansion and growth. However, due to various reasons embedded in the local culture and mentality, entering the Chinese pharmaceutical market may not be so easy. That is why most pharmaceutical companies prefer a form of cooperation with local companies or the opening of subsidiaries, including research centers. Confronted with skyrocketing drug supply costs, China's drug regulators are taking tough measures to control prices and reduce distribution costs, including by reducing participants in the distribution chain. Despite all this, analysts support the view that the Chinese pharmaceutical market could reach $200 billion by 2020.

In 2017, the Japanese pharmaceutical market maintained third position in the world ranking. Despite the Japanese government's efforts to contain healthcare costs, prescription drug spending still increased by 1% in 2017, reaching a market value of US$120 billion. The Japanese government is seeking to bring rising costs under control, in particular taking measures aimed at increasing the share of generics from 60% to 80%. In addition, the goal has been set to reduce prices for expensive innovative medicines by up to 50%.

The over-the-counter drug market is in a phase of deregulation. This process is associated with the growth of online trading and an increase in the market share of over-the-counter drugs to 20%.

The leader of the Japanese pharmaceutical market, Takeda, is strengthening its position. Moreover, it does this not only by creating a joint venture with the largest player in the generics market - the Israeli company TEVA, but through active international expansion. At the beginning of 2017, Takeda bought the American company Ariad Pharmaceuticals for $5.2 billion. With this acquisition, it plans not only to significantly expand its range of anticancer drugs, but to strengthen its market position in the American prescription drug market.

An important place in the global pharmaceutical market is occupied by the group of countries “Pharmerging’markets” (highlighted by the analytical company IMS Health and consisting of 21 countries). According to economic indicators, it is divided into three subgroups. The first included China, the second included Brazil, India and Russia, and the third included 17 countries with significant populations and great growth prospects. Over the past decade, these markets have become the locomotive and main driver of growth in the global pharmaceutical market. On average, they increase annually by 11-15%, while saturated traditional pharmaceutical markets grow by only 1-4% per year. In 2017, the total volume of pharmaceutical markets “Pharmerging’markets” reached 405 billion US dollars, which is 33.8% of the global pharmaceutical market.

According to analysts, the annual growth rate of the global pharmaceutical market in the coming years will be 3-6%.

TOP 20 drugs

To understand what factors are driving the development of the pharmaceutical industry, it is certainly worth analyzing the TOP 20 drugs that became leaders in terms of sales in 2017.

Let's look at these molecules individually.

Table 1

TOP 20 drugs by achieved sales in 2017

It should be noted that almost all of the drugs that were among the top sales in 2017 are biotechnological products.

A clear proof of the importance of biotechnological drugs is such an indicator as their share in the total turnover of the leaders of the pharmaceutical market.

The share of biotechnological drugs in the total turnover of Abbvie is 65%, Pfizer - 50%, Roche - 45%. Their importance is so great that this topic is worthy of a separate article.

In 2017, the trend of increasing the introduction of new molecules or even new therapeutic regimens to the market (and, mainly, we are talking about biotechnological drugs) continued. Perhaps this area is at its peak right now. At the end of 2017, 43 new drugs received FDA approval. Their sales, according to market experts, will reach 31.6 billion US dollars 5 years after launch.

The EMA has granted marketing authorization for 31 new molecules. Of these, 92% are biotechnological drugs (for example, monoclonal antibodies and various cell receptor inhibitors). The share of biosimilars is growing. Let's look at the new molecules in more detail.

table 2

New drugs registered in Europe in 2017

An analysis of the list of new drugs shows that the most promising areas, as before, include: oncology, HIV infection, diabetes mellitus, multiple sclerosis, orphan diseases and biosimilars. We can confidently expect that these trends will continue in 2018. German market analysts predict that 30 new molecules will be introduced to the market in 2018. One third of them will have to improve the treatment of cancer patients.

This list is a direct consequence of the fact that leading pharmaceutical companies are investing heavily in the development of new promising groups of drugs. R&D expenses increased by another 4% to US$158.9 billion in 2017. Today, the world's leading pharmaceutical companies invest in R&D from 13% (Celgene) to 36% (Johnson & Johnson) of their net turnover.

TOP 15 global pharmaceutical companies

To what extent have companies managed to adapt to new trends in industry development? This is best demonstrated by the results of their economic activities in 2017.

Table 3

TOP 15 global pharmaceutical companies by sales volume and net profit in 2017

*Pharmaceuticals and OTC only

**Bayer Healthcare only

Source: annual reports of pharmaceutical companies, 2017

An analysis of the results of economic activities of leading pharmaceutical companies shows that after the invasion of the TOP-15 by the American company Gilead (this event occurred in 2014), the composition of the elite of the global pharmaceutical business remained virtually unchanged. However, there was a certain rotation within the group of leaders.

Of course, not all companies cope with the challenges of today's reality equally well; some do it better, some worse. Among these challenges are:

• patent collapse on traditional synthetic chemical blockbusters;
• the development of biotechnology and the appearance on the market of a completely new group of biological products, which will partially or completely revolutionize the treatment of many types of diseases;
• expansion of the scope, levels of sales and sales of pharmaceutical products;
• the emergence of new counterparties on the market in the form of pharmacy chains or retail operators operating via the Internet;
• the desired combination of forms of stationary and non-stationary trade in the form of multi-channel sales.

Individual leaders

Let's look at the situation facing individual leaders in more detail:

1. Roche

In 2017, the Swiss company Roche was able to continue its path of organic growth. The concern increased its sales by 5% (based on constant exchange rates). This growth was mainly driven by the Prescription Drugs division due to the launch of new drugs such as Ocrevus (ocrelizumab), Tecentriq (atezolizumab), Alecensa (alectinib). These three drugs alone accounted for 65% of the growth, and already in the first year after launch their share in the sales volume of this division reached 4%.

The company's net profit decreased due to R&D costs, the launch of new molecules and the fulfillment of pension obligations.

Sales of the company's blockbuster Mabthera/Rituxan and Avastin declined 11% and 2%, respectively, due to competition from biosimilars in European markets.

With the final acquisition of the US biotech company Ignyta, Roche has strengthened its strong position in the field of oncology. The company's managing director, Mr. Daniel O'Day, commented on this transaction as follows: “Cancer is a complex disease and many patients suffer from mutations that are false to detect and even more difficult to treat. The integration of Ignyta ideally complements our global cancer portfolio.”

1. Pfizer

In 2017, the American company Pfizer, despite a slight decline in turnover (-1%), entered the top three leading pharmaceutical companies. The decline in sales was due to the following factors:

• Patent expirations for Enbrel, Lyrica and Vfend in developed markets in Europe and for Pristiq and Viagra in the US (-$2.1 billion);
• Interruptions in the production of injectable drugs by Hospira in the United States;
• Decline in sales of the Prevnar 13 vaccine due to the removal of the “adult” indication.

These negative developments were offset by increased sales of key products such as Ibrance, Eliquis, Inflectra globally and Xelianz in the US market, as well as sales growth in emerging markets of US$1.1 billion (11%).

After major acquisitions in 2016, Pfizer took a wait-and-see approach to mergers and acquisitions in 2017. This policy was dictated by the change of presidential administration in the United States and the lack of clarity regarding further tax and legislative reforms, rather than by the availability of sufficient financial resources. To the contrary, in 2017, Pfizer management announced that it was considering strategic alternatives for the division, including a sale.

With such interesting brands as Centrum, Advil, Nexium 24 HR, Nexium Control Robitussin, the turnover of this division in 2017 reached 3.41 billion US dollars. Pfizer management said it expects to receive at least $20 billion from the deal. This amount turned out to be too large for such a giant as the American company Johnson & Johnson. Only the American company Procter&Gamble was able to take part in the competition.

1. Novartis

In 2017, the Swiss company Novartis almost managed to stop the decline in sales. They fell only 1.22%. This result was achieved due to strong sales growth of Cosentyx (secukinumab) and Entresto (sacubitril/valsartan). Thus, sales of Cosentyx increased to 2.1 billion US dollars, and Entresto - to 507 million US dollars. This is much more than in 2016, when they amounted to 972 and 400 million US dollars, respectively.

These results were needed to offset the continued decline in sales of drugs that lost patent protection. For example, sales of the drug Gleevec/Glivec in 2017 decreased by $1.38 billion (-42%).

Due to known reasons for lack of profitability, Alcon's ophthalmology division was subject to a strategic review in 2017. As a result of this process, the company returned to the path of stabilization and growth.

In 2017, sales of this division grew by 4%, and operating profit increased by 5%. That didn't help eliminate the company's desire to say goodbye to this generally unsuccessful acquisition (if a buyer could be found), but it did give the division some breathing room in deciding whether to sell before 2019.

Novartis made a number of small acquisitions in 2017, such as the American company Encore Visoin Inc. for US$456 million and the British company Ziarco Group for US$420 million. Their purchase was driven by the desire to strengthen the dermatology and ophthamology divisions.

Despite certain changes, the current managing director Joseph Jimenez had to leave his chair in February 2018 and transfer the business to his heir, Mr. Vas Narasimhan. Apparently, shareholders no longer believed that Mr. Jimenez was able to decisively turn around and modernize the pharmaceutical heavyweight at the required pace.

In this regard, it is interesting to note that Novartis, already under new management, announced the sale to the British company GSK of its stake (36.5%) in its joint company for the sale of over-the-counter drugs GSK Consumer Healthcare. In 2017, the Novartis/GSK joint venture had a turnover of US$10 billion and a net profit of US$1.8 billion. The value of this transaction is estimated at 13 billion US dollars. Obviously, the process of cleaning up assets and focusing on key segments of the company's activities continues, but it is happening more decisively.

1. GlaxoSmithKline

The British pharmaceutical giant in 2017, with an overall sales increase of 8%, showed growth in all of its three main business segments.

The innovative prescription medicines segment grew by 8% to £17.3 billion. In the same segment, new drugs generated sales of £6.7 billion, up 51% on 2016.

The vaccine division posted 12% growth to sales of £5.2 billion.

GSK Consumer Healthcare achieved sales of £7.8 billion, up 8% on 2016.

In its traditional area of ​​respiratory and asthma drugs, GSK has seen strong competition from generics. In 2017, sales of Advair (fluticasone propionat) and Seretide decreased by 14%. The reason is the necessary reduction in prices and the transition to more modern drugs in therapy.

This has encouraged GSK to invest heavily in R&D across its core therapeutic segments, namely the development of drugs for the treatment of respiratory diseases, HIV infection, malignancies and autoimmune diseases. And new developments in the field of respiratory infections, in particular, the drugs Ellipta (Umecledinium) and Nucala (Mepolizuab), have already brought the first results. These new molecules generated sales of £1.93 billion in 2017.

Rumors have emerged that GSK has expressed interest in acquiring the over-the-counter division of US company Pfizer. However, it is unlikely that GSK is ready to spend $20 billion on such an acquisition, which is exactly what Pfizer expects to receive from this deal.

1. Johnson & Johnson

In 2017, the American giant J&J very rapidly developed its pharmaceutical and over-the-counter business. As a result, global sales of the pharmaceutical division increased by 11.4% to US$40.4 billion. Sales of anticancer drugs developed successfully, showing an increase of 25% and reaching $7.26 billion. The sales leaders in this segment were the drugs Darzalex/daratumumab (+117%) and Imbruvica/ibrutinib (+51.3%).

To strengthen its pharmaceutical business unit, J&J acquired Swiss biotechnology company Actelion in 2017 for US$30 billion.

Market analysts commented on this acquisition as follows: “The acquisition price is too high and exceeds 30 times the expected sales of this company for 2018.” So far, Actelion drugs have not even added a billion to current sales. All hopes for the future are associated with the rapid introduction of a new BTK inhibitor into practice for the treatment of oncological diseases.

Sales of the company's best-selling drug Remicade (infliximab) fell 13.1% to $7.1 billion. This is due to the fact that competitor Pfizer brought its biosimilar Inflectra to market at a price 15% cheaper than the original.

The second drug that showed a decline in sales is Invokana (canagliflozin), intended for the treatment of diabetes. Its sales decreased 21% to US$1.11 billion.

The OTC division's turnover showed a positive increase of 3.7% to US$4.13 billion. At the same time, sales in two segments, namely women's health and dermatology, decreased by 2.3% and 1.5%, respectively. Perhaps due to this sluggish business segment development, J&J has shown interest in Pfizer's OTC portfolio.

Back in 2006, J&J bought brands such as Listerine, Nicorette and Zyrtec from Pfizer. However, too high expectations on the part of the potential seller pushed J&J to officially abandon the deal.

1. MerckSharpDome

In 2017, the American company Merck showed sales growth of only 1%. Global sales of the flagship product portfolio, Keytruda (pembrolizumab), increased from $1.402 billion to $3.809 billion. This happened due to a significant expansion of indications and approval of the drug as monotherapy in the treatment of lung cancer. This decision of the regulatory authorities can be considered as a revolutionary coup, since monotherapy with the drug frees patients from the serious side effects of traditional chemotherapy. These facts forced the company's management to cancel the decision to close production facilities in Ireland. On the contrary, a plan was born aimed at expanding them.

Of course, Merck doesn't live outside the reality of today's pharmaceutical world, which is why the company's traditional drugs like Januvia (-3%) and Vytorin (-43%) have suffered big sales declines.

Despite large reserves, Merck showed sluggish activity in the M&A market in 2017 and acquired German immunotherapy company Rigonetic for just US$600 million.

Merck is one of those companies that has decisively divested itself of its OTC business to focus on its core pharmaceutical business. Probably, in the case of this company, this decision will be correct.

1. Sanofi

The French company Sanofi completed 2017 with impressive results. The company's total turnover increased by 5.6% and reached 35.1 billion euros. The biggest growth was demonstrated by the biotechnology business segment, based on the product range acquired from the American company Genzyme. In 2017 it added 15.1% and reached €5.67 billion.

Many of the company's hopes were realized only in the fourth quarter of 2017, when new molecules Dupixent (dupilumab) and Kevzara (sarilumab), intended for the treatment of atopic dermatitis and rheumatoid arthritis, were introduced to the market, respectively.

The vaccine sales business grew by 8.1% to €5.101 billion.

The traditional segments “diabetes” and “cardiovascular diseases” lost sales. They decreased by 14.3% to 5.4 billion euros.

Old-time best sellers such as insulin analogues Lantus (-17.5%) and Insuman (-15.5%), as well as drugs Allegra (-12.9%) and Renagel (-12.3%) suffered from generic competition .

In order to develop the most dynamic and promising biotechnology segment, Sanofi made two important acquisitions in 2017 - the American biotechnology companies Bioverativ and Ablynx. They strengthen Sanofi's position in hemophilia and rare blood disorders (Bioverativ) and nanotechnology (Ablynx).

Important for Sanofi is its strategic cooperation with the biotechnology company Regeneron in the development of human monoclonal antibodies.

Sales in the OTC segment increased by just 2.5% to €4.834 billion. In general, there is very little information on the results and prospects of the over-the-counter business, for which great hopes and expectations were placed after the merger last year with the business division of the German company Boehringer. According to the managing director of Sanofi, Mr. Brandicourt, this acquisition was supposed to catapult the company to a market share of 4.6% among the leaders in this market segment. Using the example of further analysis of the development of this division, it will be possible to find an answer to a rather controversial question: is the over-the-counter business a fairly large resource for promoting the economic activities of large pharmaceutical companies?

1. AbbVie

In 2017, sales of the American company AbbVie increased by 10.5% and reached 28.2 billion US dollars. AbbVie is heavily dependent on sales of its blockbuster Humira (adelimumab). This unique drug, which the company received in 2000 as a result of the acquisition of the German company Knoll-BASF Pharma, turned out to be a diamond and has been leading the ranking of the best-selling drugs for many years by a clear margin. In 2017, this drug also managed to show an increase of 14.6%. But Humira's share of AbbVie's turnover is 65%, such dependence on one drug is a real precedent in the industry, which is why many experts have already dubbed AbbVie "Humira Corporation." This situation makes the company very vulnerable to competition from biosimilars. There are already several “biocopies” of the adelimumab molecule on the market, including from Amgen, Boehringer Ingelheim, Sandoz, Fujiil Kyowa. And while the last three competitors operate primarily in Europe and Japan, the biggest threat to AbbVie's $10.4 billion in the US market is Amgen's biosimilar. For this reason, AbbVie in September 2017, as part of a patent trial, negotiated an agreement from a competitor to refrain from actively marketing its drug Amjevita until 2023. This success gives the company the breathing space it needs to close the gap that is sure to arise as a result of a number of biosimilars coming to market.

1. Gilead

Over the past three years, including 2017, the American biotech giant's sales have been declining. At the end of last year, they decreased by 14% to 26.1 billion US dollars. This was mainly due to the decline in sales of blockbusters Sovaldi (sofusbovir) and Harvony (Ledipasvir/Sofosbuvir) from a peak of US$19.1 billion in 2015 to US$5.35 billion in 2017. And yet, thanks to the new combination drug Epclusa/Vosevi (sofosbuvir/velpatasvir), the company managed to slow down such a steep decline in 2017 and achieved sales of $9.1 billion in the field of hepatitis C drugs. However, American competitor AbbVie with its cheaper rival drug Mavyret is successfully taking away a significant market share from the former monopolist. These stark facts make the prospects for sales of these drugs very dismal. According to experts, sales in 2018 will amount to 3.5-4 billion US dollars.

It should be noted that Gilead has a rich potential range of its own developments. Examples include HIV drugs Genfoya, Odefsey and Descovy, whose sales increased by 10% from 2016 to 2017 to reach $5.99 billion. The company's portfolio includes a unique drug Truvada for the prevention of HIV infection with huge sales potential, and promising developments in the treatment of non-alcoholic steatohepatitis are also expected. But it becomes clear that, relying only on its own efforts, the company will not be able to return to its former sales peaks. For this reason, for a couple of years now the company has been faced with the task of diversifying its product range. In this regard, Gilead’s management decided to use an already proven successful scheme to acquire other people’s potential assets. The $11.9 billion buyout of Kite Pharma opened the door for Gilead to enter a promising new area of ​​cell therapy. It should be noted that all developments of the new acquisition are still far from commercialization. This means that to quickly improve its business results, expect more aggressive moves from Gilead in the mergers and acquisitions market.

1. Bayer Healthcare

While the turnover of the German concern was practically stagnant in 2017, the pharmaceutical division of Bayer Healthcare showed an increase of 6%. Among the drugs that stood out were: the blood clotting inhibitor Xarelto (+13%), the drug for the treatment of age-related macular degeneration Eylea (+16%), the antitumor drug Xofigo (+23%).

Bayer's headache is its OTC business. Sales of this division decreased in 2017 by 3% to 5.87 billion euros. At the same time, there will be no way to integrate and successfully develop the over-the-counter brands acquired from MSD. Sales of the leader in this range, Claritin, decreased by 3.3%, and sales of drugs from the range of the umbrella brand Dr. Scholl, despite the repositioning of the brand, decreased by 10.2% to 211 million euros.

Last year, many experts expressed fears that the buyout of the American agricultural giant Monsanto would be too big an indigestible piece for Bayer. But Bayer increased its activity in the pharmaceutical segment, in particular, Bayer, together with the biotechnology company Loxo Oncology, developed and registered the substance larotrectinib in the USA for the treatment of a number of oncological diseases. At the very least, Bayer is showing the pharmaceutical community that it has not forgotten the importance of its pharmaceutical division and is making the necessary financial efforts to develop it.

1. Amgen

In 2017, the American biotech pioneer did not show the same growth as in previous years. The company's turnover remained almost at the level of 2016. This is due to the fact that sales volumes of such top sellers as Neupogen (-27%), Aranesp (-7%), Neulasta (+-0) and Enbrel (-13%) decreased by almost $1 billion due to due to competition from biosimilars.

New products such as the drug Repatha (Evolocumab) (+69%), which lowers cholesterol levels, despite the growth achieved, have not yet achieved the required growth rate and level of absolute sales. In addition, Repatha faces strong competition from the outset from Praluent (Alirozumab), a joint development between Sanofi and Regeneron. However, Praluent is undergoing clinical studies in which it may exhibit effects that would significantly expand its approved indications.

It should be noted that Amgen currently has 7 projects in very promising areas of modern medicine at the last stage of clinical development. This means Amgen has enough resources for internal organic growth.

1. AstraZeneca

In 2017, the British company continued its policy of focusing on selected therapeutic groups (Growth Platforms). These include: oncology, diabetes and respiratory tract diseases. This allowed it to improve its R&D cost savings. The company managed to slow down the decline in turnover from 7% in 2016 to 2% in 2017 and, thus, mitigated the impact of the patent collapse on the drugs Nexium (-4%) and Crestor (-30%), as well as sales of the Pfizer antibiotic range.

However, we can note the first positive trends in the sales results of 5 new drugs - Brilinta, Farxiga, Fasenra, Imfinyi Calquence, which were especially evident in the 4th quarter of 2017. At the same time, in the 4th quarter of 2017, sales of Brilinta and Farxiga increased by 23% and exceeded the threshold of one billion US dollars, thereby becoming blockbusters. Sales of drugs included in the Growth Platform increased by 6% and amounted to 68% of achieved sales in 2017. AstraZeneca has implemented a number of measures aimed at reducing operating costs. Thus, the company sold its range of narcotic drugs for $555 million to Aspen Global Incorporated.

Moreover, the company reduced R&D expenses by 4% to US$5.4 billion. Core operating expenses fell 4%. Meanwhile, costs associated with bringing new molecules to market increased by 9%.

The company's managing director, Mr Pascal Soriot, said: "Our new strategy, based on a strong portfolio of new scientific developments, an excellent organization, sales force and a policy of strict cost savings, has begun to bear fruit."

1. Teva

Kåre Schultz, the new Danish managing director of the Israeli company, was unable to draw a successful conclusion in 2017. The company's global sales rose 2% to $22.4 billion. However, the company's operating loss amounted to US$17.5 billion. The company, with a market value of US$12.3 billion, had US$35 billion in debt at the end of 2017. What led to this situation was primarily the oversized $40 billion acquisition of Allergan's generic portfolio, the dramatic decline in generic prices in the United States, declining sales of the blockbuster Copaxon (Glatirameracetat) due to generic competition, and significant delays in registration and introducing new drugs to the market. For this reason, the new head of the company initiated a broad restructuring program in 2017, which includes measures to reduce operating costs. Among them:

1. Sale of non-core assets such as a range of contraceptive and women's health products for expected proceeds of US$2 billion;
2. Closure of 15 production sites out of the existing 87;
3. Exit from 45 sales markets with 100 existing ones;
4. Cutting 14,000 jobs, including 270 in Germany.

There is speculation that Teva will reconsider its relationship with PGT Healthcare, a global OTC drug distribution joint venture formed in 2011 with Procter & Gamble. Today this company operates in 70 countries.

The company's management is confident that the measures taken will bring the first positive results in 2018 and will lead the company to its previous healthy economic state. On the positive side, the company's falling share price has attracted high-profile investors such as Lem Blavatnik ($3 billion) and Warren Buffet ($360 million). This immediately increased the stock price and the company's creditworthiness and is likely to attract even more investors.

1. Eli Lilly

The American company turned out to be quite successful in 2017 and increased its turnover by 8% to 22.87 billion US dollars. Considering that the company's turnover in 2015 was below 20 billion US dollars, we can conclude that Eli Lilly has finally managed to balance the consequences of the patent collapse, the end of sales exclusivity, the appearance of therapeutic analogues on the market with an active policy of introducing new molecules to the market. This conclusion is confirmed by sales figures for specific drugs.

On the one hand, the company's traditional drugs (Strattera (-60%), Humalog (-5%), Cialis (-12%), Cymbalta (-17%), Erbitux (-6%), Alimta (-3%) Zyprexa (-1%)) are losing significant sales. On the other hand, new drugs Trulicity (+93%) and Cyramza (+16%) are gaining in sales volumes and growth rates. In addition, such new products as Taltz (141%), Jardiance (+95%), Basaglar (+252%) demonstrate rapid growth. These new drugs help the company not only offset declining sales of traditional drugs, but also get back on track for growth.

At the same time, 18 projects are at the final stage of development. Most of these new developments have the potential to become blockbusters, and therefore generate a turnover of more than one billion US dollars.

The company's Managing Director, Mr. David Ricks, gave the following assessment of what is happening: “We have numerous opportunities based on 8 new molecules introduced to the market over the past 4 years and 2 molecules in stock. However, in order to really put this resource on track, we abandoned some of the non-strategic assortment, took measures to optimize our administrative structure and reduce operating costs.”

1. Bristol-Myers Squibb

In 2017, the American company Bristol-Myers Squibb managed to increase turnover by 7%. A group of priority drugs, including blockbusters Opdivo (nivolumab), Eliquis (apixaban), grew in sales by 27% or $3.2 billion. At the same time, sales of so-called established brands fell by 40% or $1.8 billion.

The Company is actively engaged in regulatory work on a global scale to expand the use of its Opdivo/Yervoy drugs as a combination therapy.

The American concern, since 2008, has completed a number of acquisitions of foreign assets in order to strengthen its progressive range in the field of oncology and diabetes.

In September 2017, BMS acquired IFM Therapeutics for US$300 million to strengthen its oncology division.

Despite this positive development, there are still rumors in the market about a possible next mega-deal. Its target could be Bristol-Myers Squibb, and the actors could be the American companies Pfizer, Gilead Sciences or the Swiss companies Roche and Novartis. All candidates are floating in liquidity. Of the industry's $250 billion in free cash, Pfizer alone has $80 billion. All players have long been looking for a large victim to absorb. However, the market value of Bristol-Myers Squibb, according to experts, reaches $100 billion. The question arises: which of the applicants is able to absorb and assimilate such a tasty morsel?

Mergers and acquisitions

Undoubtedly, the process of consolidation in the industry continues and will remain a big driver of market development.

Let's look at mergers and acquisitions in 2017 that exceeded $1 billion in volume.

Table 4

Top of mergers and acquisitions in the pharmaceutical industry in 2017

Biopharmaceutical industry very dynamic. Big Pharma players in 2016 resorted to a variety of ways to increase income. Some of them relied on innovative drugs, while others were actively developing biosimilars - analogues of drugs of biological origin that had lost their exclusivity. Pharmaceutical companies have worked productively in many areas of medicine, but the development of advanced cellular and gene technologies, for example, in the field of immunological oncology and the treatment of neurodegenerative diseases, seems especially promising. To reorient industry priorities and implement development strategies, companies exchanged assets and expanded product portfolios. In this publication, you will be able to get acquainted with the top five leaders of the global pharmaceutical market in terms of sales income at the end of 2016, as well as the methods that helped companies achieve such great heights.

Not all Big Pharma players saw tangible benefits in 2016 in terms of increased sales revenue. 4 companies from the above five increased their sales income in 2016 compared to 2015 (table), but a significant increase in the indicator is typical only for Pfizer and Roche (8 and 5%, respectively). For Johnson & Johnson and Roche, the total sales revenue for all divisions is shown.

Source: “Top 15 pharma companies by 2016 revenue” report by FierceFarma.

To increase sales revenue, they are actively developing new drugs, looking for opportunities to acquire “successful” assets and ways to intensify the promotion of products on the market. Let's consider what strategic steps the companies from the above top 5 took in 2016.

"JOHNSON & JOHNSON"

The company is known for regularly adding new products to the global pharmaceutical market, while its shareholders can remain calm due to the stability of stock prices. Total sales revenue for all Johnson & Johnson divisions in 2016 was $71.9 billion. USA, and global sales of the company's pharmaceutical division are $33.5 billion. with a 6.5% increase in this indicator compared to 2015.

Blood cancer drug Imbruvica (ibrutinib) had a banner year in 2016, with sales of $1.2 billion, up 86% from 2015. It is a first-in-class Bruton's tyrosine kinase inhibitor. , which Johnson & Johnson released in collaboration with AbbVie. According to EvaluatePharma, the drug will be the third best-selling cancer blockbuster in the world in 2022, with projected sales revenue of $8.29 billion.

Johnson & Johnson certainly entered 2017 in better shape than it did in 2016. During that time, it made several important moves. The largest of these was a complex $30 billion deal that began negotiations in 2016 and ended in January 2017. Johnson & Johnson acquired Swiss biotech company Actelion Pharmaceutical Ltd. and for 280 dollars. per share received a Swiss biotech portfolio of promising drugs, including Opsumit (macitentan) and Uptravi (selexipag) - drugs for the treatment of pulmonary arterial hypertension. Once the deal is completed, the company expects to see rapid earnings growth from sales of these drugs, which generated more than $1 billion in revenue in 2016.

In the stock market, Johnson & Johnson continues to maintain high profitability. In 2016, the value of its shares increased by 12% compared to 2015. In terms of share price growth, the company ranked between GlaxoSmithKline (14%) and Merck & Co (11%). This provision is viewed as a “safe harbor” in a volatile pharmaceutical market.

Johnson & Johnson confidently promotes new products to the market thanks to the professional work of marketing specialists. Johnson & Johnson CEO Alex Gorsky said that in 2017, professional marketing will help achieve a 4-5% increase in profits compared to 2016. According to company experts, sales income in 2017 will be 74.1–74.8 billion dollars, and adjusted profit - 6.93–7.08 dollars. per share.

"PFIZER"

In 2016, an important event was to take place in the global pharmaceutical market - the merger of Pfizer Inc. and Allergan, but the deal was cancelled. Despite this, Pfizer reported higher profits in 2016 and is expanding its distribution footprint to maintain that growth.

Pfizer is strengthening its position in the global market: in 2016, its sales in monetary terms increased by 5% ($2.2 billion) compared to 2015 and reached $48.1 billion. In the United States, the increase in this indicator was more significant, sales income increased by 21% ($4.7 billion) over the specified period. A number of products played an important role in this: the breast cancer drug Ibrance (palbociclib), the antiepileptic drug Lyrica (pregabalin), the anticoagulant Eliquis (apixaban), the arthritis drug Xeljanz (tofacitinib) and the nicotine addiction drug Chantix (varenicline). . In total, during the period under review, the volume of their sales in monetary terms increased by more than $2.8 billion.

Palbociclib saw sales revenue soar from $723 million. in 2015 to $2.14 billion. in 2016. The Company expects the product to become more profitable in the future as physicians prescribe it to a wider range of patients.

Meanwhile, apixaban has created excitement in the market for a new generation of anticoagulants. After a tepid start, Pfizer and its partner Bristol-Myers Squibb have invested heavily in marketing the drug, and the drug is now catching up to Johnson and Johnson's Xarelto (rivaroxaban) in terms of marketing investment.

In 2016, Pfizer was able to close several important deals that it believes will help increase revenue. In August, it acquired the company Medivation, which was a tasty morsel for many Big Pharma players. By entering into a purchase agreement, Pfizer acquired the rights to the prostate cancer drug Xtandi (enzalutamide).

Prior to this, Pfizer acquired Anacor Pharmaceuticals and secured the rights to the potential blockbuster eczema treatment Eucrisa (crisaborole), which was approved by US regulators in December 2016.

The company is not going to stop there. It plans to continue making acquisitions that will drive earnings growth, said Frank D'Amelio, the company's chief financial officer. And if the U.S. considers tax reforms affecting the flow of funds from abroad, Pfizer will have plenty of room to make such purchases.

"ROCHE"

Roche derives consistent revenue from a successful portfolio of oncology blockbusters such as Avastin (bevacizumab), Herceptin (trastuzumab) and Rituxan (rituximab). Compared to 2015, the Swiss company's global sales revenue increased by 4% in 2016, and its net profit increased by 7% ($9.8 billion). The company's analysts calculated that sales growth will remain at this level in 2017. Chief Executive Officer Severin Schwan expects innovation to be the pharmaceutical manufacturer's main driving force in the future.

Roche's new products, such as Perjeta (pertuzumab) and Kadcyla (trastuzumab emtansine), are intended to treat aggressive metastatic breast cancer. The pharmaceutical company tested their combinations with time-tested drugs. If successful, this approach could stimulate sales of both older and newer drugs.

The combination of Herceptin and Perjeta increased revenue from sales of these products. In 2016, sales of the first drug in monetary terms increased by 4% (to $6.7 billion) compared to 2015, and the second by 26% (to $1.8 billion), which allowed it take 4th place in the ranking of Roche products in terms of sales income for 2016. For the drug Kadcyla, this figure increased by 7% (to $821 million) for the specified period.

Tecentriq (atezolizumab) from Roche is the company's first immuno-oncology product. The drug's revenue is expected to skyrocket in the near future as Tecentriq received U.S. Food and Drug Administration approval in October 2016 for the treatment of non-small cell lung cancer. The drug was previously approved for the treatment of urothelial carcinoma, the most common bladder cancer.

Roche launched four new drugs and nine diagnostic tests in 2016, and is expecting some key regulatory approvals in 2017, including the approval of Ocrevus (ocrelizumab), a potential multiple sclerosis drug that could be its biggest launch yet in 2017

"NOVARTIS"

In a massive $25 billion asset swap, Novartis sold its veterinary division (Novartis Animal Health) to Eli Lilly and its vaccine business to GlaxoSmithKline in exchange for some of the British drugmaker's oncology assets . The deals come as the Swiss company focuses primarily on cancer drugs. Novartis plays a critical role in the rapid development of the immunological oncology field. The company is focused on the next wave of drugs in this promising area and has a portfolio of drug candidates in development.

In the fall, Novartis achieved priority review for the LEE011 molecule. This substance is also known as ribociclib and could compete with Ibrance, Pfizer's famous oncology product. The analytical company EvaluatePharma considers ribociclib as a promising launch of the year, and its projected sales revenue in 2022 is estimated at $1.6 billion.

Novartis CEO Joe Jimenez says biosimilars will be a key driver of the company's revenue growth in the future. Approval is expected in August 2017 for a biosimilar to Amgen's tumor necrosis factor inhibitor Enbrel (etanercep). Novartis plans to launch biosimilars to Humira (adalimumab, AbbVie), Rituxan (rituximab, Biogen) and Remicade (infliximab, Johnson & Johnson) in the near future.

D. Jimenez also expects the company's revenue to increase thanks to new products such as Cosentyx (secukinamab), a drug for the treatment of psoriasis. It achieved blockbuster status in 2016, achieving sales of $1.1 billion.

Novartis is interested in conducting mergers and acquisitions worth up to $5 billion. and plans to actively continue activities in this area.

"MERCK & CO"

In 2016, Merkс & Co increased its revenues on the global market by 1% compared to 2015 and is optimistic about the future. For her, an important milestone was that in 2016 the drug Keytruda (pembrolizumab) received blockbuster status with sales revenue of $1.4 billion. - this is a big breakthrough compared to income of $566 million. in 2015. The drug competed with Opdivo (nivolumab), a product of Bristol-Myers Squibb.

Merkc & Co. has operated during a period of significant volatility and uncertainty, including the current political and regulatory environment in the United States, as CEO Ken Frazier told investors and company analysts at a conference in late 2016. However, he believes Big Pharma players will weather these uncertainties through their broad and balanced product offerings.

Merkс & Co became one of the leading pharmaceutical companies in terms of share price growth in 2016, second only to GlaxoSmithKline and Johnson & Johnson.

The company was able to increase worldwide sales revenue for Januvia (sitagliptin) in 2016 compared to 2015, an important win as intense competition among diabetes drugs has hurt some competitors' profits. During this period, Januvia's sales volume in monetary terms increased by 2%, reaching $6.1 billion.

The human papillomavirus vaccine Gardasil has become another successful product from Merkc & Co. The franchise led to a double increase in income from vaccine sales: in 2016, the figure increased to $2.17 billion.

Entering 2017, the company believes its profitability is improving, which will lead to higher net earnings per share. In 2016 in the USA this figure was 2.04 dollars, and its range in 2017 is calculated as 2.47–2.62 dollars.

After the announcement of financial results for 2016, Merkc & Co announced that its drug candidate for HIV therapy - doravirine - showed significant success in phase III clinical trials and, after entering the market, will be able to become a worthy competitor to the company's drug Prezista (darunavir). Johnson & Johnson.

RESULTS

Large ones have significant potential to balance in difficult conditions in the global market thanks to a wide product portfolio. In 2016, Big Pharma players placed bets on both proven and innovative drugs and the development of biosimilars, invested in the development of products in new areas of medicine, for example, immunological oncology, exchanged assets and replenished product portfolios in order to increase revenues from sales in the future.

Top 10 pharmaceutical companies in the world 2014

Below is a global ranking of pharmaceutical companies. Modern technologies and scientific developments have allowed these companies to produce high-tech products, thereby receiving tens and even hundreds of millions of dollars in profit per year.
We can claim that the production of these companies in terms of technology and equipment is at the top of world achievements in this field. They use the most modern technology, equipment and the latest scientific developments. The rating is based on annual product sales volume.

1. Johnson & Johnson

Johnson & Johnson is an American pharmaceutical company, but it also produces consumer products. The company was founded in 1886 and consists of three main production complexes: pharmaceuticals, medical instruments, and diagnostic equipment.
It employs approximately 128,100 people. The company produces a variety of household medicines for first aid. Some of the famous Johnson & Johnson brands include: Band-Aid, Tylenol, Neutrogena. In December 2012, the FDA approved Johnson & Johnson's drug Sirturo. Sirturo is an anti-tuberculosis drug, it is the first new medicine to fight the infection. Another new drug is Invokana, which was the first SGLT2 inhibitor approved by the FDA and is aimed at improving the body's absorption of glucose.

Sales: $65,030,000,000

Sales: $57,920,000,000

3. Pfizer Inc.