The 2016 earnings season is nearly over and some companies gave really excellent performance reports like Bristol-Myers Squibb with 17% organic revenue growth and AbbVie with 13.3% sales growth.
Negative performance for some players like Gilead (suffering base effect linked to a very strong 2015 performance) and AstraZeneca (struggling with a fragmented portfolio unable to drive growth).
In the PDF document (q4-2016), I computed the 2 ratios (operating margin and R&D in % of sales), I also added a column for 2017 guidance follow-up and made some comments on the results, especially the main products and whether I could see any growth driver.
The earnings season for Big Pharma is now over with Teva publication yesterday.
As usual, a table summarizes the main figures and key points from each publication. Worth noting that some companies like Gilead suffered from a basis effect after a stellar performance last year. Among top performers, Bristol-Myers Squibb, Pfizer and GSK held well during the last quarter. The bottom performers were Gilead, AstraZeneca and Novartis with the last two companies experiencing negative impact from generics.
All the big names published their Q2 results during the summer. After spending some time on the beach, looking at their numbers is a good way to be immersed in the industry again.
During this last earnings season, performances were extremely heterogeneous. AbbVie and BMS had stellar revenue growth while AstraZeneca, Gilead and Sanofi showed poor performance for diverse reasons (explained below in the table – NB: you can click on it to make it bigger).
Comparing the Top 15 each quarter is insightful and allows me to spot pockets of growth and dynamism in the industry as well as challenges and red flags.
The Q1 2016 earnings season is now over. It is always nice to take a step back and compare the big names of the pharmaceutical industry.
Below you will find the key figures published by the most important companies in the industry.
Nearly all of the companies already published their 2015 financial results. Performances varied widely and some clearly outperformed others as in any industry.
The 2015 best company is Gilead: what an amazing performance! In less than 2 years, it reached the Top 15 Pharma companies. More than USD 19 billion of sales had been generated from Harvoni and Sovaldi, both disruptive drugs against hepatitis C. 58% of 2015 sales came from those 2 products. Diversification will be the next challenge for the company.
The table below summarizes the main financial data points for 2015:
Teva has not yet published its results at the time of my post. I’ll update it later on.
*For Takeda, the company released only its 9-month results and for comparison purposes I extrapolated the 9-month into a 12-month period.
After populating the table, 2 aggregates have been computed:
- Total sales in 2015 from Top 15 Pharma companies: USD 487 billion
- Total R&D expenditures in 2015 from Top 15 companies: USD 82.5 billion
All in all, the big names of the industry spent close to 17% of their sales in research and development.
When we look at the 4th column in the table, year over year growth in constant currencies is between 0 and 8% apart for 2-3 companies like AbbVie (linked to the Pharmacyclics acquisition in May 2015), Bristol-Myers Squibb and Lilly.
Generally speaking, the pharmaceutical industry is still a cash-rich and good performing industry. More challenges will probably come from pricing pressures around the world (and this time not only Europe or Japan, but also from the USA).
In the following table, the top pharma companies (ranked by 2014 annual sales) key stats for Q3 2015 are detailed in their reporting format and currency.
|| Q3 2015 sales (bn)
||Growth yoy (CER)
|| Q3 2015 operating profit (bn)
||Op Margin (%)
|Merck & Co.
|Johnson & Johnson
|Allergan (former Actavis)
Cambridge and San Diego are two main centers for innovation in life sciences, according to GlaxoSmithKline. Actually the big pharma established a “first-of-its-kind collaboration” with San Diego’s Avalon Ventures in 2013; lastly it has opened a small office in San Diego to manage its R&D partnerships and to prospect for more deals on the West Coast. GSK also set up a similar outpost in 2014 in Kendall Square, the Cambridge, MA, neighborhood that has become the pharmaceutical industry’s East Coast hub and is close to Harvard, MIT, and the Broad Institute.
GlaxoSmithKline and Novartis said they had completed a series of asset swaps worth more than $20 billion that will reshape both drugmakers. GSK is forming a consumer health joint venture with Novartis, while at the same time buying the Swiss company’s vaccines business and divesting its cancer drugs portfolio to Novartis. The two companies originally announced the transactions in April 2014 to bolster their best businesses and exit weaker ones as the drugs industry contends with healthcare spending cuts and increased generic competition. More details