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Biopharma's Top R&D Spenders - 2012

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Add up the top-line R&D spending for the top 10 pharma companies in the world and you'd think that nothing had changed from 2011 to 2012. But you'd be very wrong. Big Pharma's heavy hitters in R&D have a wildly mixed record in a fast-changing field.

The gross research budgets for these companies hit $70.37 billion last year, down ever so slightly from $70.38 billion the year before, when viewed at constant exchange rates. But while most companies carefully stayed on an unchanged budget track--Novartis ($NVS), Merck ($MRK), J&J ($JNJ), GlaxoSmithKline ($GSK), Sanofi ($SNY), Eli Lilly ($LLY), AstraZeneca ($AZN) and Abbott ($ABT)--Pfizer ($PFE) registered the big drop in spending that had long ago been forecast. Roche ($RHHBY), meanwhile, saw its numbers jump in the face of some big, one-time restructuring costs. And Abbott ($ABT) is making an appearance for the last time as AbbVie ($ABBV) has now spun out to forge its own unique path in the biopharma business.

Those billions bought dramatically different results for the biggest players in the business. Pfizer, for all its budget cutting, registered 5 new drug approvals in 2012, including a pair of significant front-line therapies. And now it's shoving a new set of late-stage assets into the market spotlight in hopes of keeping a new rep for an effective development strategy.

Two of the giants, Merck and AstraZeneca, have had unimpressive if not woeful pipeline results, which forced out two well known R&D chiefs--Martin Mackay and Peter Kim--while setting the stage for the return of Roger Perlmutter, who gained a reputation for embracing new biologics technology while heading up research ops at Amgen ($AMGN).

Roche, which expects to keep its future R&D budget in line with past performance, engineered a seismic alteration of the R&D landscape when it shut down its Nutley, NJ, facilities in favor of the cutting edge enthusiasts in Genentech--gRED to company insiders. Faced with poor performance at its other R&D shop--pRED--Roche switched out its chief there as well. John Reed from Sanford-Burnham now rules that roost, which is reexamining the way it does translational research.

These days, keeping your job requires new blockbuster approvals.  

That's a message that is likely to hit home this year at Eli Lilly, which has not gained an approval on any internally developed new product in the past two years. For a company that has sworn off big mergers in favor of its own in-house R&D efforts, that's a signal failure. And even as buybacks keep its share price fat and investors happy, even Lilly CEO John Lechleiter can't go indefinitely without a few big wins in its column.

In 2013 Lilly will be swinging once again for the fences. This time it needs to connect, and no secondary analysis of the data will put numbers on the big board.

GlaxoSmithKline, which has a full slate of 6 drugs under regulatory review, knows that only too well. After reengineering R&D in 2008, striking a little biotech theme for the Big Pharma group, it's time to deliver new products. But the company may have to wait longer before it can claim success with any true breakthroughs.

Analysts expect Sanofi to continue to shift resources to the U.S., and in particular to Boston, where the recently acquired Genzyme is working on biologics. And Novartis will keep plugging along with one of the biggest pipelines in the industry, looking to rack up more points in a game that often measures progress in niche-busting inches, rather than blockbuster yards.

It will be an interesting year ahead. Here's a look at last year's results, and an analysis of where they point. -- John Carroll, Editor-in-Chief. Follow me on Twitter and LinkedIn.