Which Big Biotechs are hitting the gas pedal on R&D spending?
The R&D numbers for the top 10 biotechs may only amount to a fraction of what you'll find in Big Pharma. But unlike the giants, which are trying to keep a lid on multibillion-dollar budgets, you'll find a much faster crowd when you turn your gaze to the biotechs. All 10 reported increases in their research spending for last year. And a few of them slammed their foot on the gas pedal.
Altogether the top 10 biotechs spent $11.8 billion on R&D in 2012, according to our research, a hefty 15% average increase over their 2011 performance. Compare that to the stable year-over-year record in Big Pharma, where doing more with the same amount of cash has become an industry mantra.
At Gilead ($GILD), the HIV powerhouse pushed R&D spending up by 43% as it pursued one of the most ambitious late-stage programs in the industry for hepatitis C. The increased spending also pushed them to the number-two spot on the list and left them in the clear lead with one of the most promising experimental therapies in the field. Further, it helped position the company as an emerging player in hep C, ready to blow past the likes of Vertex ($VRTX) and Merck ($MRK) while maintaining its lead over AbbVie ($ABBV), Bristol-Myers Squibb ($BMY) and others.
Even Amgen ($AMGN), the original Big Biotech, upped spending in 2012, despite a decision to trim research costs toward the end of 2011 as its CEO and research chief were being led to the exits.
Overall, the numbers paint a clear picture of a better focused, more nimble and relatively more successful development record for Big Biotech when compared to the average Big Pharma company.
Biogen's record spending, for example, left the company with the hottest new drug for multiple sclerosis, Tecfidera. Celgene ($CELG) has become a partner of choice in the industry with the welcome sight of its checkbook opening doors around the world. Shire ($SHPG) has become a case study in successful growth, with a new CEO putting his own structure and teams in place. Vertex may be about to bid farewell to its hep C franchise, but the company has managed to fill the void with a top-rate combo for cystic fibrosis. And there's another, next-gen hep C effort in the clinic. Regeneron ($REGN) has had perhaps the most successful year in the industry, with one new drug now entering blockbuster territory and some more research programs grabbing analysts' attention. Actelion persevered with a new pulmonary arterial hypertension (PAH) program that emerged a winner in Phase III, while Onyx ($ONXX) has had a winning streak in cancer drug development and BioMarin ($BMRN) expanded with some carefully tailored acquisitions.
New research has also indicated that it's the Big Biotechs which are seeing the most dynamic growth in product revenue as Big Pharma endures a bitter era of generic competition for some traditional blockbusters.
So while the numbers may be smaller, these companies proved to be better focused than most Big Pharmas on key assets. It's the kind of record that can make a biotech a top takeover prospect. It also makes them prime candidates for new deals of their own. -- John Carroll, Editor-in-Chief. Follow me on Twitter and LinkedIn.