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Top global pharma cos post sales growth of just 3.4%, but net profit up by 12.8% in 2011

Sanjay Pingle, Mumbai
Monday, May 7, 2012, 08:00 Hrs  [IST]

The leading 15 international pharmaceutical giants registered satisfactory performance during the year ended December 2011 despite continuing economic uncertainty, expiration of patent exclusivity for several block busters, little outcome from R&D investments, restructuring and legal costs, stiff generic competition  and austerity measures adopted by several European nations. The net profit of 15 companies increased by 12.8 per cent to US$ 97 billion during 2011 from $86 billion in the previous year with significant contribution from GlaxoSmithKline, Bayer and Boehringer Ingelheim.

These companies are now focusing more on fast-developing economies and emerging markets to overcome competition and economic problem in highly regulated markets. Emerging markets like China and India have large populations and these markets are likely to grow significantly more than mature markets in the next few years. The growth in chronic diseases, ageing population and change in lifestyle with more income in hand are creating new opportunities for business operations.

The total revenues of Pharmabiz 15 leading international companies viz., Abbott, Amgen, AstraZeneca, Bayer, Boehringer Ingelheim, Bristol-Myers Squibb Co, Eli Lilly & Co, GlaxoSmithKline, Johnson & Johnson, Merck & Co, Novartis, Pfizer, Roche, sanofi-aventis and Teva Pharmaceutical increased only by 3.4 per cent to $586 billion from $567 billion in the previous year. The study did not include Takeda Pharma Co of Japan as its year is ending in March. The total revenue includes mainly pharmaceuticals, vaccines, ophthalmic, generics, diagnostics, animal health and nutrition products. Bayer's aggregate revenues also includes CropScience and Material Science.

For better comparability, Pharmabiz has taken constant exchange rate and converted currencies like Euro, Pound and Swiss Francs into US Dollar as at the end of December 2011 and 2010. The exchange rate of Dollar verses Pound remained same at $1.55 and that for Euro was $1.29 as at the end of 2011 as compared to $1.33 as at the end of 2010. The exchange rate of Swiss Franc was $1.07 as against $1.06 as at the end of 2010.

The pharmaceutical sales including vaccines, ophthalmic and generics increased only by 2.9 per cent to $443,118 million from $430,446 million in the previous year on account of significant slid in vaccines sales by 13.1 per cent to $15,784 million from $18,159 million. Excluding vaccines sales, pharmaceutical sales increased by 3.6 per cent to $427,334 million from $412,287 million.

Pfizer remained on top among 15 companies with pharmaceutical sales of $57,747 million in 2011 as against $58,523 million in the previous year, a fall of 1.3 per cent. Novartis maintained second largest position in pharmaceutical sales of $53,935 million during 2011. With merger of Alcon, Novartis' pharmaceutical sales increased smartly by 16.6 per cent from $46,259 million. Merck & Co also maintained its third position with pharmaceutical sales of $41,289 crore as against $39,267 million.

Roche lost its fourth position to sanofi-aventis as its pharma sales declined by 11.4 per cent to $34,891 million from $39,388 million in 2010. Sanofi-aventis clinched fourth position with pharma sales of $ $37,153 million in 2011, declined slightly from $37,325 million in the last year. Abbott achieved double digit growth of 13 per cent in pharma sales to $22,435 million as compared to $19,850 million and Teva Pharma recorded pharma sales growth of 13.6 per cent to $18,312 million from $16,121 million. The pharma sales of GlaxoSmithKline declined by 5.2 per cent to $34,294 with ranking at 6th position. AstraZeneca, Merck & Co, Johnson & Johnson, Eli Lilly, Bristol-Myers, Amgen and Boehringer Ingelheim posted single digit growth in pharma sales during 2011.

The sales of consumer healthcare segment of 15 companies increased by 3 per cent to $45,208 million from $43,906 million in the previous year. Johnson & Johnson (J&J) achieved Consumer Healthcare sales of $14,883 million followed by Bayer of $9,349 million and GlaxoSmithKline (GSK) of $8,029 million. The sales of diagnostics segment of these 15 companies improved only by 2.2 per cent to $43,598 million in 2011 from $42,659 million in the previous year. Again J&J recorded highest sales of diagnostics to $25,779 million followed by Roche and Abbott at $10,360 million and $7,459 million respectively. The sales of animal health segment of these 15 companies increased by 13.6 per cent to $8,492 million, a growth of 13.6 per cent. Pfizer recorded animal healthcare sales of $4,184 million, sanofi-aventis $2,629 million and Eli Lilly $1,679 million during 2011.

The research & development (R&D) expenditure of Pharmabiz sample of 15 international companies declined by 2 per cent to $85,952 million from $87,719 million in the previous year due to reduction in R&D expenditure by Bayer, GSK, Merck & Co, Pfizer and Roche. Novartis remained highest R&D spender of $9,583 million followed by Pfizer $9,112 million and Roche $8,858 million. The R&D expenditure of Merck declined by 23.8 per cent to $8,467 million from $11,111 million and that of Roche declined by 16.9 per cent to $8,858 million from $10,656 million. GSK's R&D expenditure went down by 10.1 per cent to $6,195 million from $6,894 million.

The cost of goods sold of 15 companies increased by 4.1 per cent during 2011 to $178 billion from $171 billion in the previous year. The marketing, sales and administrative expenditure increased by 1.2 per cent to $172 billion from $170 billion. The profit before tax and adjustment increased by 9.1 per cent to $120 billion from $110 billion. The taxation provision reached at $25 billion as against $23 billion. The net profit, after all provisions, increased by 12.7 per cent to $96,902 million from $86,022 million. Merck notched a strong net profit of $6,272 million as against $861 million. GSK reported growth of 194 per cent in net profit to $8,434 million as against $2,866 million. Bayer clocked a net profit growth of 86.7 per cent to $3,201 million from $1,724 million and Boehringer Ingelheim registered a growth of 62.4 per cent to $1,911 million. Pfizers' net profit surged by 7.5 per cent to $10,009 million from $8,257 million.

The net profit of J&J declined by 27.5 per cent to $9,672 million from $13,334 million and that of Eli Lilly declined by 14.2 per cent to $4,348 million from $5,070 million. Similarly, Novartis also suffered setback and its net profit declined by 7.3 per cent to $9,245 million from $9,969 million. Teva Pharma and Amgen net profit dip by 17.1 per cent and 3.3 per cent to $2,768 million and $4,858 million respectively.

The sales of top 100 products of sample of 15 companies improved only by 2.1 per cent to $245,944 million from $240,960 million in the previous year. Due to loss of exclusivity of patent during last couple of years, the number of blockbusters (sales above $1 billion) declined to 89 products during 2011 from 100 in the previous year. Pfizers' Lipitor, for reducing of LDL cholesterol, maintained its top position, but its sales declined by 10.8 per cent to $9,577 million from $10,733 million. Abbott's Humira for treatment of rheumatoid arthritis grabbed second slot overcoming GSK's Seretide/Advair product. Humira sales went up sharply by 21.1 per cent to $7,932 million from $6,548 million and that of Seretide/Advair declined by 1.6 per cent to $7,821 million from $7,949 million.

During the year 2011, few important products lost blockbuster status and there sales declined due to loss of exclusivity and generic competition. AstraZeneca's product Seloken/Toprol-XL for cardiovascular and Synagis for treatment in infection and other lost blockbuster status as its sales declined to $986 million in 2011 from $1,210 million in the previous year and $975 million from $1038 million. Similarly, Aciphex/Pariet of J&J , NeoRecormon/Epogin of Roche and Avapro/Avalide of Bristol-Myers lost blockbuster status in 2011.

Besides, Lipitor and Seretide/Advair, few important blockbuster products like MabThera/Rituxan (Roche), Diovan (Novartis), Avastin (Roche), Herceptin (Roche) Zyprexa (Eli Lilly & Co), Nexium (AstraZeneca), Lovenox (Sanofi-aventis), Remicade (Merck), Plavix (Sanofi-aventis), Aranesp and Epogen (Amgen), Vytorin (Merck), Aprovel/CoAprovel (sanofi-aventis), Cozaar/Hyzaar (Merck) Procrit/Eprex (J&J), Pegasys (Roche) and Zometa (Novartis) received setback during 2011 and their sales declined in 2011.

Though the operating environment is challenging one, these pharmaceutical companies are moving ahead with restructuring of business operations and tie-ups with other companies. The consolidation of operations is one way of cost cutting measures and during last few years there where few important mergers and acquisitions like Pfizer-Wyeth, Merck-Schering, Abbott-Solvay, Novartis-Alcon, etc. This trend is likely to increase in the coming years. Several products are in the phase III with uncertain final outcome and longer time for development of new drugs is also putting pressure on overall working. The returns from R&D is closely connected with intellectual property (IP) aspect and effective legal protection is critical issue for growth in bottom line of these companies.



 

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