5. Pfizer


R&D budget: $8.01 billion
Change from 2017: +4%
Total 2018 revenue: $53.6 billion
R&D budget as percentage of revenue: 14.9%

Another company that saw a major restructuring drive last year was Pfizer. Ahead of the transition to new CEO Albert Bourla, who succeeded Ian Read at the start of this year, the company brought all its innovative drug divisions under one Pfizer Biopharmaceuticals group—separate from its generic and consumer healthcare products unit—after combining CHC with GlaxoSmithKline. The intention is to streamline processes and governance as well as free up cash for R&D and business development, Pfizer says.

The revamp comes at the end of a lengthy period of patent expiries for Pfizer, and after a protracted period in which the company struggled to bring enough new products through to compensate. The loss of protection for $5 billion nerve pain therapy Lyrica next year in the U.S. will be the last big one, and after a protracted period of deal-making the pipeline is starting to deliver.

2018 saw a wave of new approvals, including four targeted cancer agents over the last four months of 2018, namely leukemia drug Daurismo (glasdegib), Lorbrena (lorlatinib) for ALK-positive non-small cell lung cancer, PARP inhibitor Talzenna (talazoparib) for breast cancer, and Vizimpro (dacomitinib) for EGFR-mutated NSCLC. Add in a few biosimilar approvals and line extensions, and the year looks reasonably productive.

The company marked this year with 100 programs in development, including 26 in phase 3, 28 in phase 2 and 11 at the preregistration stage. And it will need to keep the pipeline buzzing if it is to meet its "15 in five" objective of bringing 15 new blockbuster medicines to market between 2018 and 2022.

The rise in R&D spending last year was driven by that maturation in the pipeline, and especially the costs of phase 3 programs for breakthrough JAK1 inhibitor abrocitinib (PF-04965842) for atopic dermatitis and its vaccine against Clostridium difficile, which is in pole position in development after a Sanofi fail in 2017. It’s also been spending a lot on registration trials for Merck KGaA-partnered cancer immunotherapy Bavencio (avelumab)—already approved for bladder cancer and Merkel cell carcinoma—as it tries to catch rivals like Bristol-Myers Squibb and Merck & Co.

The Bavencio development program includes 30 ongoing studies, seven of which are potentially registration-enabling, involving more than 9,000 patients across 15 tumor types, although it has had setbacks in NSCLC and ovarian cancer.

Looking at the late-stage pipeline, 2019 could see approval for tafamidis—a treatment for rare disease ATTR cardiomyopathy that will take on Alnylam and its recently approved Onpattro—plus various biosimilars, but a lot of the newsflow will be in late-stage trial readouts setting up approvals in 2020 and 2021.

Those include abrocitinib, rivipansel for vaso-occlusive crisis in sickle cell disease, and notably Eli Lilly-partnered NGF inhibitor tanezumab, which has the potential to be the first in a new class of pain reliever that could address the unmet needs of people living with osteoarthritis, lower back and cancer pain—if side effects don’t lead to regulatory hiccups. If all goes well, analysts are pointing at multibillion-dollar sales potential.

Other highlights from 2018 included the start of a phase 3 trial for a new 20-valent pneumococcal conjugate vaccine to extend its Prevnar franchise, and a pivotal phase 2b/3 trial for a first-in-class JAK3 inhibitor for moderate-to-severe hair loss.

It hasn’t all been good news of course: Pfizer stopped two studies of its midstage Duchenne muscular dystrophy candidate domagrozumab after a trial failure and abandoned third-generation EGFR inhibitor mavelertinib for NSCLC, anti-IL7R antibody PF-06342674 for Type 1 diabetes, CAR-T PF-06883541 and utomilumab, a CD137 agonist antibody.

There’s been little going on in M&A since a flurry of deals in 2016 including Medivation and Bamboo Therapeutics, and under Bourla, Pfizer has repeatedly ruled out a large-scale deal, saying the emphasis is on executing on the pipeline via smaller deals such as an alliance with Novartis on nonalcoholic steatohepatitis combinations.

Pfizer decided to completely exit neuroscience R&D, offloading several programs including a midstage dopamine 1 partial agonist for Parkinson’s onto a new company called Cerevel and a schizophrenia drug to Biogen. However, it has signaled its intention to ramp up its investment in external projects—including neuroscience—with a $600 million tranche of funding for VC arm Pfizer Ventures.

Check out Pfizer’s pipeline here.

5. Pfizer

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