While 2020 was a year to forget for almost the entire globe, the R&D engine of pharma roared to life in a never-before-seen way by creating new drugs, vaccines and tests for the pandemic that ravaged the world.
Many companies saw revenue dip as it became more difficult to sell in the field with other disruptions from COVID-19 mounting, and those hurdles partly explain why a lot of this year’s top pharmas, after years of stagnation, saw some significant rises in their budgets as a percentage of sales.
The roughly $70 billion total from the top 10’s budgets combined over the past five years swelled to $96 billion, with almost all seeing boosts in their research budgets (bar Novartis and Sanofi). Back in 2018, for the first time, the top 15 largest pharma companies (by sales) funneled more than $100 billion into research. Three years down the line, and our top 10 have nearly met that number on their own.
While COVID clearly reshaped some budgets, there was also a major uptake in deals. Many transactions were, naturally, focused on COVID, but there were plenty in the more traditional areas such as cancer, and in more forgotten areas, like heart disease and antibiotics.
Merck was a real jumper this year, finally moving from third to displace J&J, who has been second to Roche for many years now. Spending $13.6 billion on its research in the year, a huge 37% jump over the year before, Merck saw its R&D spend as a percentage of its sales leap to more than 28%.
As you’ll see, however, money does not equal success, and this was true for Merck as it was for GlaxoSmithKline.
The biggest mover was Bristol Myers Squibb, up from eighth place in 2019 to fourth in 2020, with its research budget nearly doubling to $11.14 billion. This was, of course, largely artificial, given that it was the first full year it counted the $74 billion buyout of Celgene into its figures, but it will be interesting to see how long the company holds onto that position in the future.
The bottom three—Sanofi, AbbVie and Eli Lilly—are all bunched up, having spent very similar amounts around the $6 billion to $6.5 billion figure. But the three have very different 2020 stories.
Eli Lilly also returns to the top 10 after a year’s departure, taking the place of AstraZeneca, which slipped down to what would be eleventh after posting a 1% drop in its R&D budget to $5.9 billion.
Check out our top 10 below. -- Ben Adams, senior editor, Fierce Biotech.
Editor’s note on rankings: A number of reports will have different ways of assessing these budgets; we factor in spending on mergers and acquisitions and use the gross figure from each company’s full-year financial results as filed with the SEC, and convert local currencies into dollars for the final ranking.