FirstWord Lists: New product launches of the past five years – which Big Pharma companies have performed best?

In 2012, 10 Big Pharma companies (AstraZeneca, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Pfizer, Roche and Sanofi) recorded combined sales of $14.8 billion from products that have been approved as new molecular entities (NMEs) by the FDA since 2007. This figure equates to just 4.9 percent of total branded revenues recorded by these same 10 players in 2012.

Novartis and Johnson & Johnson have been the most prolific Big Pharma companies in terms of commercially successful, innovative new drug launches since 2007, and generated 10.7 percent and 10.3 percent of 2012 branded sales from products approved during this period; Gilenya (multiple sclerosis), Tasigna (chronic myeloid leukaemia) and Afinitor (various cancers) are standout product approvals for Novartis since 2007, likewise Stelara (psoriasis) and Zytiga (prostate cancer) for Johnson & Johnson.

Bristol-Myers Squibb also performs impressively, and generated 8.5 percent of its 2012 revenues from products launched since 2007 (its notably smaller revenue base of approximately $17 billion helps in this respect), with Onglyza (diabetes) and Yervoy (melanoma) positioned as the company’s key NME approvals.

At the other end of the spectrum, the challenges facing new AstraZeneca CEO are illustrated by the company deriving just 1.6 percent of its 2012 revenues from products approved since 2007 (furthermore – and not detailed in this analysis – the company derived a significant proportion of its 2012 revenues from products set to expire over the next five years). Eli Lilly fares little better, generating just 2.2 percent of its 2012 sales from launches since 2007 – emphasising why the pipeline narrative remains particularly prominent at the US-based company.

Similarly, Pfizer also generated 2.2 percent of its 2012 sales from new launches, but can at least point to the commercial potential of Eliquis and Xeljanz, both of which were only approved in 2012. However, the recent concession from management that both products have failed to launch as rapidly as expected is clearly a very real concern in the context of this analysis. Roche generated just 3.3 percent of its 2012 revenues from products approved since 2007, but this ratio can be viewed in a different way given that the company derives a significant proportion of sales from longer-duration assets – in this instance a handful of best-in-class biologic therapies that are not expected to undergo a drastic reduction in sales once patent expiry occurs (Sanofi will similarly point to its Lantus franchise).

There are limitations to any analysis such as this – which uses fixed time points in a dynamic environment such as the Big Pharma R&D space – demonstrated to some extent by a number of Big Pharma’s 2012 approvals, which are expected to perform strongly over the next five to 10 years.

It is interesting to note, for example, that by extending the 'review period' to NME products approved by the FDA between 2006 and 2012 (i.e. one additional year), revenues generated by these drugs in 2012 double to $29 billion – or approximately 10 percent of total branded sales generated by the 10 Big Pharma companies in the same year.

What does this tell us?

Firstly, was 2006 a particularly good 'vintage' in terms of new product launches? Extending the review period by an additional year includes a further eight NMEs approved by the Big Pharma peer set, five of which generated blockbuster sales in 2012. However, two new products approved by the FDA in 2006 dominate in terms of revenues; Merck’s Januvia – which generated sales of $5.7 billion in 2012 – and Lucentis – which generated a combined $4 billion in 2012 for Novartis and Roche.

If we compare revenue yield from products approved by the FDA since 2006 versus products approved since 2007 at a company level, the underlying picture does not change. Each of the three companies that derived the largest proportion of 2012 sales from products approved between 2007-12 (Novartis, Johnson & Johnson and Bristol-Myers Squibb) see this ratio increase markedly if the review period is extended to 2006. Similarly, AstraZeneca and Eli Lilly don’t see any movement in their ratios – both companies have only received one NME approval each from the FDA since 2005. The exception is Merck, which based on the 2006-12 review period, sees a notable jump in the percentage of revenues it derives from 'new' products – from 4.2 percent to 20.9 percent.

The catalyst for this is the inclusion of sales derived from Januvia (and the sister product Janumet), which by some margin is the most successful Big Pharma NME approval since 2006. By comparison, Lucentis is the second most successful launched followed – by some distance – by Merck’s own Isentress, which generated 2012 sales of $1.5 billion.

The below list – which ranks (by 2012 sales) the 10 most successful Big Pharma NME approvals since 2006 – further illustrates that Januvia is something of an anachronism in today’s pharmaceutical market – a last throwback to the golden blockbuster age?

The knock on effect is the threat that Merck becomes over-reliant on the Januvia franchise to support its revenue base – and thus more exposed to patent expiry. This is a particularly pertinent question given that Merck has suffered a lack of NME approvals since 2007 – a trend that shapes both the significant 'jump' in 2012 revenue ratio when Januvia is included and arguably the recent departure of R&D chief Peter Kim. A more severe case of product dependency can be levelled at AbbVie (which generates approximately 45 percent of its sales from Humira) excluded from this list given a lack of NME approvals since 2006. See also FirstWord Lists – Big Pharma's Blockbuster dependency rates.

A quick overview of the methodology for this analysis

We used NME and BLA approvals by the FDA to select the inclusion of products, and removed non-comparable revenues from each company’s total sales to calculate the ratios (i.e. removed generic, non-pharma and vaccine sales – as vaccines are not considered NME approvals). To select the 'Big Pharma' peer set we selected non-Japanese headquartered or biotech companies from those players that generated 2012 global sales in excess of $15 billion. We selected 2007 as the initial cut-off point for new approvals, thereby providing a five year window (2008-12) for the oldest launches within this review period.

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