R&D budget: £3.89 billion ($5.1 billion)
Change from 2017: -13%
Total 2018 revenue: £30.8 billion ($40 billion)
R&D budget as percentage of revenue: 12.6%
Roche was looking to kick-start its R&D revolution under CEO Emma Walmsley last year, adding deals, new executives and new directions, all the while cutting the fat.
The year ended with its decision to buy Tesaro for around $5.1 billion, giving it FDA-approved cancer drug Zejula, as well as three other clinical oncology assets, as it looks to reverse decisions made under old CEO Sir Andrew Witty, which saw it back away from cancer.
One of its largest cancer assets is its BCMA therapy, which is in early trials for multiple myeloma. It’s targeting a 2020 launch with combo tests also on the cards.
Cancer and immunotherapies, both in cancer and in other areas, also become a more focused path for the U.K.-headquartered Big Pharma, and last year it nabbed heavy hitter Hal Barron, the former Genentech and Calico executive, who is taking the company’s research projects by the horns.
Last July, GSK explained of its new approach: “GSK intends to promote a culture of increased accountability and smart risk-taking. This will include redefining success and fostering a culture of truth-seeking versus progression-seeking, and optimized portfolio decision-making, alongside implementation of a new robust governance model. Targeted business development to strengthen the group’s pipeline and technology capabilities will also be part of the new R&D approach.”
There won’t be, however, any major structural changes across R&D, as the company’s top executives appear to have little appetite for that right now, but rather an evolution. Walmsley came into GlaxoSmithKline with a mission to change up its R&D, and she’s wasted little time in looking to enliven a largely stagnant pipeline. She has been busy making some big changes, sweeping out programs here and buying up other programs there.
Early on in her tenure, Walmsley said she was scrapping more than 30 drug development programs. The major cull of pipeline prospects has seen GSK focus 80% of its R&D budget on the top candidates in four therapeutic areas, while also exiting rare disease programs it had in the past made so much of in the press.
Other aspects of the revised strategy include a focus on improving connections between the R&D and commercial teams and “governance around pipeline decision-making.” The focus appears to acknowledge previous weaknesses in how GSK has made pipeline decisions and transitioned drugs from the clinic to the market.
Walmsley unveiled the overhaul of GSK’s R&D priorities at the end of her first full quarter as CEO in 2017 and is focusing GSK’s attention on two therapeutic areas in which it already has a sizable presence—respiratory and HIV/infectious diseases—and two in which it aspires to grow: oncology and immuno-inflammation, areas where Kevin Sin, another ex-Genentech executive added to its new-look research team last year, is being put to work.
The cancer focus is somewhat of a turnaround for GSK, which in 2014 under former CEO Sir Andrew Witty traded away most of its oncology assets in exchange for the Novartis vaccines stable in a multibillion-dollar deal.
There has also been a big jump, then fall, in its R&D budget: In 2017, it spent £4.47 billion on research; fast-forward one year, and it’s down 13% to £3.89 billion, back in line with previous years.
Part of this “reflected reduced restructuring costs primarily due to the comparison with the provision for obligations as a result of the decision to withdraw Tanzeum in 2017 and lower intangible impairments, a favourable comparison with the impact of the Priority Review Voucher purchased and utilised in H1 2017 and the benefit of the R&D prioritisation initiatives started in the second half of last year,” GSK explained in its financials this year.
It is however funneling more into a number of mid- and late-stage programs, particularly in oncology.
Check out GSK’s pipeline.