Blockbuster products are the key to the market competitiveness of pharmaceutical companies. With the advent of the patent cliff, new drug research and development capabilities have become one of the decisive factors for corporate profitability.

R&D investment ranking of global pharmaceutical companies

Following the announcement of the annual reports of global listed pharmaceutical companies, the US biomedical industry media Fierce Biotech global pharmaceutical company has sorted out the TOP10 R&D investment of global pharmaceutical companies, which is an upward trend in general.

Roche ranked first on the list, with R&D investment of US$13.85 billion, accounting for 22.2% of total revenue. This is an increase of US$1.385 billion compared to 2019. In 2020, Roche’s sales were US$62.12 billion, an increase of 1% year-on-year, and sales in China were 16.787 billion yuan, an increase of 16%.

It is understood that due to the impact of the epidemic, the revenue of Roche's pharmaceutical sector has declined, and the overall business growth is supported by the diagnostic reagents sector. The investment in the detection of the new crown pneumonia virus has rapidly transformed, and a variety of diagnostic kits have obtained emergency use authorizations from regulatory agencies. Except for tocilizumab, which was launched in 2005, the sales of other drugs such as bevacizumab, rituximab, and trastuzumab decreased by 25%, 31%, and 34%, respectively.

Merck's investment of US$13.6 billion ranked second, a sharp increase of 37% over 2019. Pfizer’s ranking remained unchanged, and Eli Lilly replaced AstraZeneca and returned to the TOP10, while AstraZeneca’s R&D investment fell by 1% to $5.9 billion, falling to the 11th place.

These pharmaceutical companies have attracted much attention

1. Pfizer

Pfizer's ranking is the same as in 2019, both ranking fifth. Total revenue in 2020 is 41.9 billion U.S. dollars, and R&D investment is 9.4 billion U.S. dollars, accounting for 22.4% of total revenue, an increase of 750 million U.S. dollars compared with 2019.

Pfizer previously stated that it has also achieved good results in the R&D success rate. As of the end of 2020, the company’s R&D project that entered Phase 1 clinical trials has finally successfully advanced to Phase 3 clinical trials, and the 5-year clinical success rate with positive results reached 21. %. This is more than 4 times higher than the company's level in 2015 (5%), and it also exceeds the industry's average level (8%) in 2019.

Among them, the company has achieved a significant increase in the success rate of phase 2 clinical development, from 15% in 2015 to 52% in 2020. In terms of R&D investment, Pfizer mainly chose infectious diseases and antibiotics, and its performance in the new crown vaccine is also particularly prominent. Among the drugs under study, PD1 monoclonal antibodies Bavencio and Xalkori approved new indications in January this year, and the first-line supplementary new drug listing application of loratinib for the treatment of ALK+ metastatic NSCLC has obtained the FDA priority review qualification and is expected to be approved in April 2021. .

Abrocitinib (JAK1 inhibitor) for the treatment of atopic dermatitis and the 20-valent pneumonia vaccine PF-06482077 are under application for marketing and are expected to receive a response from the FDA in April 2021. In addition, the new coronavirus vaccine BNT162b2, jointly developed with BioNTech, is the first mRNA new coronavirus vaccine to obtain an FDA emergency use authorization (EUA).

Because of the heavy burden of expiring patented drugs, Pfizer will achieve a revenue increase in its pharmaceutical business in 2020. According to the company’s annual report, Pfizer will focus on innovative biopharmaceuticals in the future. Although the listed product portfolio is relatively rich, it still needs to be strengthened. New support products also need to be explored for performance growth.

2. Eli Lilly

Eli Lilly’s total revenue in 2020 will be US$24.5 billion, R&D investment accounted for 24.8% of total revenue, and US$6.08 billion invested, which is the least of the 10 companies, but it increased by US$480 million compared to 2019, an increase of 9 %.

It is worth noting that in recent years, Eli Lilly has been keen on cooperating with China's leading pharmaceutical companies to develop blockbuster varieties, which has made it fruitful. For example, Sintilimab co-developed with Cinda Biosciences and Etesevimab, a new crown neutralizing antibody drug jointly developed with Junshi Biosciences. According to Eli Lilly’s annual report, the company’s revenue in China accounted for 4.6% of its total revenue in 2020, reaching US$1.117 billion, a year-on-year increase of 19%. Among them, Sintilimab contributed US$309 million.

At present, Eli Lilly is deeply engaged in the four strategic treatment areas of diabetes, tumor, autoimmunity and pain. It plans to introduce 40 new drugs (including new indications) into China in the next 8 to 10 years, and at the same time gradually expand the scale of clinical trials. In the past three years, the number of clinical trials of Eli Lilly China has more than tripled to about 60, covering different stages of clinical phase I, phase II, phase III, and post-marketing safety studies. According to WuXi AppTec, currently Eli Lilly's research projects include Alzheimer's disease antibody drug donanemab, dual receptor agonist tirzepatide, non-covalent BTK inhibitor LOXO-305 and other drugs, and the experimental data have significant effects.

Similarly, Eli Lilly has also increased its investment in new coronavirus treatment drugs. The bamlanivimab monoclonal antibody was authorized by the FDA for emergency use in November 2020. It is used to treat mild to moderate COVID-19 in adult and pediatric patients. In less than 2 months, it contributed $871 million in revenue. The year brought positive sales and sales growth.

The CEO of Eli Lilly is very satisfied with the company's overall performance in 2020, and at the same time put forward higher expectations for the performance in 2021. He believes that revenue in 2021 can reach US$26.5 billion to US$28 billion, of which COVID-19 drugs will contribute 1 billion to 20 billion. 100 million US dollars, the other growth drivers will mainly come from products such as Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Cyramza, Emgality, Tyvyt and Retevmo. In addition, in addition to continuing to maintain its leading position in the hypoglycemic drug market, Eli Lilly will continue to strengthen its business layout in the oncology field. At the same time, the layout of cutting-edge innovative therapies will focus on cell and gene therapy.

3. AstraZeneca

In 2020, AstraZeneca’s total revenue reached US$26.617 billion, an increase of 9% year-on-year, and R&D investment dropped by 1% to US$5.9 billion.

However, Dr. Mene Pangalos pointed out that between 2016 and 2020, the AstraZeneca Department of Biomedicine has achieved a success rate of 31% in product development, which is significantly higher than the industry average. He believes this is mainly due to AstraZeneca’s integration of artificial intelligence (AI) and Data science is reasonably applied in every stage of drug development.

According to WuXi AppTec, in the future, AstraZeneca will focus on the development of innovative treatments for four types of diseases, namely cardiovascular, heart failure, kidney and metabolic diseases.

The current research products include the small molecule myeloperoxidase inhibitor AZD4831, the dual glucagon and GLP-1 receptor agonist Cotadutide for the treatment of heart failure, and the monoclonal antibody MEDI3506 targeting IL-33, etc., all in Around Phase II clinical.

In addition, in 2020, AstraZeneca's revenue in China accounted for one-fifth of US$5.375 billion, a year-on-year increase of 10%, which was slower than the 35% growth rate in 2019.

AstraZeneca mentioned in its annual report that this was mainly affected by the new crown epidemic and medical insurance control fees. In 2020, AstraZeneca’s omeprazole, ticagrelor, anastrozole and other varieties were included in the new round of collection, but all of them failed the standard. AstraZeneca’s atomization center was closed due to the epidemic. After the reopening, the demand for budesonide and other drugs has grown slowly.

For pharmaceutical companies to make profits, R&D is the key

Blockbuster drugs are undoubtedly an important weapon for pharmaceutical companies to seek a competitive advantage in the market. In recent years, the patent cliff problem faced by international pharmaceutical companies has become more and more serious. After many blockbuster drug patents have expired, companies will continue to operate. Revenue and profits have been greatly affected, and the research and development of innovative drugs has become one of the decisive factors for corporate profitability.

Sanofi’s financial report shows that in 2020, clopidogrel sales in China will be 341 million euros, down 52% year-on-year; irbesartan is only 190 million euros, down 33.4% year-on-year. Sanofi pointed out in the financial report press release that its performance decline in China was mainly affected by volume purchases.

AstraZeneca, which has won the performance champion in China, also faces the same problem. Financial report data shows that the sales of its original drug gefitinib, which has passed the patent period, have fallen sharply. Bayer also admitted in the financial report that acarbose (by Tang Ping ) And Moxifloxacin (Baifule) sales have had a great impact.

The importance of the Chinese market is self-evident. Policies directly affect the strategies of multinational pharmaceutical companies for the Chinese market. Under the impact of large-scale procurement policies, multinational pharmaceutical companies have gradually shifted original research drugs to outside hospitals, but they have invested heavily in innovative research and development, focusing on innovative drugs in the domestic hospital market. In fact, the rapid growth of Eli Lilly’s revenue in China depends on the rapid increase in the volume of its products after entering the medical insurance.

However, the level of research and development of new drugs in China is also developing rapidly. Although domestic companies cannot compare with the tens of billions of investment of multinational pharmaceutical companies in terms of R&D investment, the investment of leading companies is also considerable and has achieved good results.

According to statistics from Southwest Securities, my country’s R&D investment in A-share pharmaceutical companies reached 42.6 billion yuan in 2019, and R&D investment in 2020H1 reached 18.6 billion yuan, a year-on-year increase of 12%. The Yaozhi Drug Registration and Acceptance Database shows that there are 60 new drugs approved for marketing in China for the first time in 2019, including 4 traditional Chinese medicines and 56 western medicines, of which more than 10 are domestic new drugs, setting a new historical record. Especially with the outbreak of the new crown at the beginning of last year, the speed of China's research and development of new crown "specific drugs" and vaccines has also attracted the attention of the world.

Nowadays, under a series of medical reform policies, the structure of China's pharmaceutical market has undergone changes. Transition to R&D innovation, divestiture of mature drug assets, and transformation of marketing models are all methods currently being explored by multinational pharmaceutical companies. It is foreseeable that the future Competition in the Chinese pharmaceutical market will become more intense.