Johnson & Johnson - The Biggest R&D Spenders In Biopharma

Company: Johnson & Johnson
2011 spending: $7.5 billion
2010 spending: $6.8 billion
Change: +10%
Percentage of revenue: 11.5%

Note: The $7.5 billion is a broad number that covers pharma as well as Johnson & Johnson's device work.

For all its woes with Risperdal claims and manufacturing snafus, J&J's R&D division has been pursuing a consistently successful approach to drug development. Not particularly noted for its early-stage development work, J&J's business development team has scored a series of successful pacts for promising drugs. Last year, the company ($JNJ) won three new drug approvals, putting it on par with GlaxoSmithKline for the most wins that year as the overall approval rate surged.

When the FDA laid out the list of 2011 approvals, regulators cited Zytiga (abiraterone) as a prime example of its willingness to speed up approvals when they see a solid set of pivotal data that lays out the potential benefits and risks of a new drug.  A few years ago, J&J landed abiraterone when it bought out Cougar Biotechnology for a billion dollars. That deal helped establish J&J's reputation for locking in rights to solid prospects, teeing up drugs for big pivotal studies.

Late last fall, the FDA further enhanced the company's R&D rep with a green light to market Xarelto to prevent stroke among patients suffering from atrial fibrillation--opening up a blockbuster market involving more than 2 million patients. And J&J was holding on to the European rights for telaprevir when Vertex Pharmaceuticals ($VRTX) won its approval for the new standard in hepatitis C.

J&J plans to continue racking up new wins. Last spring, J&J laid out a slate of 11 prospective approvals by the end of 2015. And analysts have been glad to endorse the company's efforts in R&D.

"Just as many of its peers are approaching their patent cliffs, J&J's Pharma business is at the front end of a rebirth, driven by new products acquired and in-licensed over the last 3-5 years and an increase in internal R&D productivity," JPMorgan analyst Mike Weinstein wrote in a research report.

That kind of performance has helped J&J suffer through some deep-seated skepticism about the Alzheimer's drug bapineuzumab. A late-stage rival to Eli Lilly's solanezumab, "bapi" promises to deliver either a huge win or a painful black eye for both J&J and Pfizer. The smart money expects a black eye. And more than a few analysts have been particularly caustic about Elan's involvement. Unlike Lilly, though, J&J's top management has had enough pipeline successes to weather a setback. 

To keep the hits coming, J&J recently inked a $975 million deal for a Pharmacyclics cancer drug, paying out a hefty $150 million upfront in the deal.

J&J also hasn't abandoned the early-stage sphere. Janssen Research & Development opened a 30,000-square-foot life science innovation center located within the company's Janssen West Coast Research Center in San Diego. And it's been inviting in local startups with bright ideas and promising platforms. J&J also joined GSK and Index Ventures on a new fund intended to back fledgling developers. And instead of just abandoning neurosciences, like GSK and others, it's been spearheading calls for an "open innovation" system where investigators can work with each other on a precompetitive basis.

With this kind of record, no one is going to criticize the company's growing R&D budget.

Johnson & Johnson - The Biggest R&D Spenders In Biopharma

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