Big Pharma companies are still, naturally, the big spenders in drug R&D, and the numbers are impressive: Last year, and for the first time, the top 15 largest companies (by sales) funneled more than $100 billion into research, and we also saw the FDA approve more drugs than ever before.
Big Pharma should get a pat on the back, right? Well, yes and no: The FDA had something of a backlog of drugs from 2017 that helped budge 2018 into more approvals, and some of the ways they classified approvals also slightly flattered the numbers (see our report below).
The tally of more than 50 new molecular entities is an impressive one, and borne from the well-funded R&D engines of life science companies; but earlier this year, a new report by the IQVIA Institute for Human Data Science showed that in fact, large pharma companies (those with more than $10 billion in yearly drug sales) have seen their R&D share drop from 31% to just 20% in the past decade.
And when it comes truly new, innovative, exciting drugs in the pipeline, the report found that the smaller biotechs are punching well above their weight.
Last year, we saw 59 new therapies get the thumbs-up under the leadership of (now ex) FDA Commissioner Scott Gottlieb, M.D. But the report points out that large pharmas were the filing companies for fewer than half of these launches. Emerging biopharma companies, on the other hand, were the originators of 38 of the 59 therapies (64%).
The report says that the “importance of large pharma in originating molecules is decreasing,” but they “remain important partners” for biotech. Still, they see the need for smaller biopharmas to team up with Big Pharma companies—and their large sales teams—decreasing.
“The dynamics of development, M&A and licensing activity seem to be shifting, and emerging companies are retaining control of their assets to a greater degree,” the report's authors wrote.
Coupled with this is the fact that, according to the index, emerging biopharma companies (those spending less than $200 million annually on R&D and having less than $500 million in sales) account for 72% of all late-stage pipeline activity, up from 61% a decade ago.
Roche, J&J, Novartis and the like are still the unmatched big boys when it comes to R&D budgets, with Roche once again coming out on top with a staggering $11 billion in R&D spend last year (though this also includes its diagnostics business).
The names and numbers don’t change much over the years (in fact, Roche, which has been at the top for a few years now, is down nearly half a billion in terms of R&D spend since 2016), but there is one big exception: Sanofi, which has penned several biotech deals and M&As, is up more than $1 billion in two years, from $5.45 billion in 2016 to $6.6 billion in 2018, as it attempts to get back into oncology, which it seemed to be walking away from.
Merck also deserves a shoutout: While its R&D budget was down from last year (when it spent $10.33 billion), its $9.75 billion spend has put it third, ahead of Novartis, in terms of overall spend, jumping from $7.19 billion, when it was the fifth highest Big Pharma R&D spender, in 2016. This coincides with now more than 1,000 trials for its cancer drug star Keytruda.
With more approvals and big topline numbers in R&D, it’s easy to think the big boys are doing all the heavy lifting, but as the IQVIA report found, don’t forget the smaller teams with supertight budgets that continue to outpace their Big Pharma rivals. — Ben Adams