Global Pharma Sector Growth Snapshot of Top 20 Pharma Companies

Editor: MA Alexander Stark

The year 2018 was another good year for the Innovation Bio/Pharma Industry. 16 of the top 20 publicly traded pharma players globally reported year-on-year (YoY) growth in their revenue, says analytics company Global Data.

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In 2018, 16 of the top 20 publicly traded pharmaceutical players globally reported YoY growth in their revenue.
In 2018, 16 of the top 20 publicly traded pharmaceutical players globally reported YoY growth in their revenue.
(Source: CC0 / Pixabay )

London/UK — Global Data analyzed the YoY change and compound annual growth rate (CAGR) for revenue, operating profit and net profit of the global publicly traded pharma companies over the past five years. The analysts selected the global top 20 firms based on 2018 revenues and the innovative nature of their revenues. The data is taken from the Global Data Pharma Intelligence Center’s Financials, Deals, and Drug Sales database and Consensus Forecast database.

In 2018, 16 of the top 20 publicly traded pharmaceutical players globally reported YoY growth in their revenue, with only Takeda Pharmaceutical, Celgene (currently under a merger agreement with Bristol-Myers Squibb Co) and Abb Vie reporting over 15 % YoY growth in revenue.

Takeda’s revenue increased by 18.5 % to $ 18.9 billion, driven by the strong performance of its key drugs Entyvio (vedolizumab) and Ninlaro (ixazomib). The company hopes its future growth will be driven by the acquisition of Shire in January 2019. Celgene’s revenue grew by approximately $ 2.3 billion, a 17.5 % increase from 2017, as a result of increased sales of Revlimid (lenalidomide), Otezla (apremilast) and Pomalyst/Imnovid (pomalidomide), prompting the potential acquisition by Bristol-Myers Squibb, which is expected to be finalized later this year. Abb Vie’s revenue grew by $ 4.5 billion, a 16.1 % increase from 2017, mostly as a result of strong performances by Mavyret (glecaprevir/pibrentasvir), Imbruvica (ibrutinib) and Humira (adalimumab), which is no longer exclusive.

Gilead Sciences was the biggest loser among the top 20 players, with a 15.2 % decline in revenue due to the weak performance of its hepatitis C virus (HCV) drugs including Harvoni (ledipasvir + sofosbuvir) ($ 3.1 billion, 72 % YoY decline in sales) and Viread (tenofovir disoproxil fumarate) ($ 0.7 billion, 71 % YoY decline in sales).

Growth snapshot of top 20 pharma companies by revenue in 2018
Growth snapshot of top 20 pharma companies by revenue in 2018
(Source: Global Data)

Despite the fact that Allergan (which is currently in the process of being acquired by Abb Vie) reported negative revenue growth in 2018, it has recorded a CAGR of 35.5 % in revenue since 2014 due to a series of inorganic growth initiatives, including the reverse merger with Actavis.

The top gainers reported over 25 % growth in operating profit include Eli Lilly, Glaxo Smith Kline, and Merck as a result of the historic one-time repatriation tax opportunity, which was favorable for these companies. Novartis' 61.5 % increase in its operating profit was driven by the growth in income of its associated companies (grew from $ 1.1 billion in 2017 to $ 6.4 billion) due to the pre-tax gain of $ 5.8 billion from the sale of 36.5 % stake in the GSK consumer healthcare joint venture.

Gilead Sciences, Bayer, Abb Vie and Merck reported operating profit declines of over 25 % in 2018. The operating profit of Gilead Sciences declined due to its high costs of goods sold (COGS), R&D and selling, general, and administrative (SG&A) expenses, including a renewed investment in Oncology.

Peter Shapiro, Director at Global Data, commented that high impairment losses contributed the operating profit decline of Bayer. Higher operating costs and expenses contributed to Abb Vie’s losses, which is seeing the slow decline of Humira sales, which long was the industry leader.

The increase in provisions for obligations from long-term variable compensation programs negatively impacted the operating result of Merck in 2018. Although Merck reported 37.8 % growth in its operating profit, it reported a negative CAGR of 16.2 % as a result of a one-time gain from the divestiture of its Consumer Care business in 2014 to Bayer AG.

On the profitability side, 10 out of the top 20 companies reported over 25 % growth in net profit. Eli Lilly, Johnson & Johnson, Bristol-Myers Squibb, Amgen, Merck, and Glaxo Smith Klinereported more than 100 % growth in profits.

Eli Lilly and Co was back to profitability as a result of the historic one-time repatriation tax opportunity and Johnson & Johnson was also a major beneficiary, with the provisional amount of approximately $ 13.6 billion associated with the enactment of tax legislation.

Bristol-Myers Squibb, Amgen, Merck, and Glaxo Smith Kline’s profit growth was also mainly attributed to tax reforms, which significantly brought down their effective tax rates along with a stronger operating performance, lower restructuring costs and lower asset impairment charges.

In 2018, the six players that reported YoY declines in profitability were Bayer, Sanofi, Pfizer, Takeda Pharmaceutical, Astra Zeneca and Allergan. Impairment losses, acquisition costs and restructuring costs mainly led to the drop in net profits seen by Bayer.

Sanofi and Pfizer’s profit dipped almost 50 % in 2018 due to the divestment of Sanofi’s Animal Health business in 2017 and Pfizer’s non-recurrence of $ 10.7 billion in tax benefits, as recorded in Q4 2017 to reflect the December 2017 enactment of the Tax Cut and Jobs Act. Over the past five years, Gilead Sciences Inc, Bayer, and Merck reported negative CAGRs of 18.1 %, 16.1 %, and 15 %, respectively.

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