Novartis - The Biggest R&D Spenders In Biopharma

Company: Novartis
2011 spending: $9.58 billion
2010 spending: $9.0 billion
Change: +6.4%
Percentage of revenue: 16.3%

Note: Novartis ($NVS) noted an R&D expense of $7.2 billion for pharmaceuticals last year, flat with 2010. The pharma giant accounted for $892 million for R&D at Alcon, $640 million for Sandoz, $523 million in vaccines and $296 million in consumer health.

If sheer size is any indication, Novartis takes its top spot in this list with an impressive 130 projects listed in development at the end of 2011. And it has some of the industry's most promising potential blockbusters in the mix. But what Novartis does better than most anyone else is maximize profits.

Its development group pushed through promising breast cancer data for Afinitor in the fourth quarter, setting up a likely expansion of the franchise as it pursues a tried and true pattern of gaining an approval and then widening the patient population. Investigators also touted promising late-stage arthritis data for Ilaris, or ACZ885, an antibody that also looks like it has significant potential beyond its initial approval. INC424--partnered with Incyte ($INCY) and recently rewarded with a European recommendation for an approval--looks very promising for myelofibrosis.

Of course, no one bats 1.000 in R&D. Novartis saw mid-stage success with DEB025 for hepatitis C, though it was recently forced to temporarily halt a study after patients taking the drug were diagnosed with pancreatitis, with one death. And investigators ran into a serious problem when they had to halt a development program for Tekturna/Rasilez after safety issues and disappointing efficacy results scuttled the effort.

Novartis recently touted a slate of positive results for its COPD blockbuster hopeful QVA149, heralding promising results from three Phase III studies in early April. Investigators for Novartis said the batch of data for the combination of indicaterol and NVA237 underscored the treatment's superiority over either of the two essential ingredients on their own, and outperformed a placebo in producing better exercise endurance.

The vaccines group, meanwhile, has pushed ahead on Bexsero for meningococcal B disease. And the pharma giant has some ambitious plans to be a leader in the biosimilars market, cashing in on its development expertise and keen marketing abilities.

Asked to assess just how nimble Big Pharma can be at drug development, InnoThink's Bernard Munos gave high marks to Novartis, with one of the lowest ratios on the average cost of development for approved therapeutics. That's exactly the kind of number that CEO Joe Jimenez would appreciate the most.

Jimenez has been pushing the giant to get into fighting trim, with a big focus on scaling down sales and marketing forces in favor of R&D. Cutting wherever possible, he's certain he can get Novartis over the big hump represented by the looming loss of patent protection on Diovan and into a new era when big new treatments add to the bottom line. His track record gives him a solid shot at success.

Novartis - The Biggest R&D Spenders In Biopharma
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