Top 15 global pharma cos post dismal performance in first 9 months of 2016

• Only three companies namely Pfizer, AbbVie and Bristol-Myers Squibb Co (Bristol-Myers) registered double digit growth in revenues during first nine months ended September 2016. The sales of Novartis, Sanofi, GlaxoSmithKline (GSK), Gilead Sciences and  AstraZeneca declined during this period and that of Johnson & Johnson (J&J), Bayer, Merck & Co, Amgen, Eli Lilly, Teva Pharma and Nova Nordisk improved only by single digit. 
• Roche and Boheringer Ingelheim are not included in the study as both have not announced nine months performance. Further, acquisition of other companies or divestment/restructuring of business activities influenced the working of few companies. For instance, Pfizer acquired Hospira Inc during September 2015 and Hospira's results included in current nine months. Similarly, it also acquired Anacor Pharmaceuticals, Inc and Medivation Inc during nine months ended September 2016. Teva Pharma also acquired Actavis Generics during August 2016. 
• Pfizer remained on top in pharma sales among the Pharmabiz sample of 15 international companies with sales of $ 39,196 million during the nine months period ended September 2016. This was followed by Novartis ($36,196 million), Merck ($29,692 million), Sanofi ($28,003 million) and GlaxoSmithKline ($26,406 million), J&J ($25,232 million) and Gilead ($22,737 million).  
• The Research and Development (R&D) expenditure of these 15 companies increased by 4.8 per cent to $59,757 million during the first nine months period ended September 2016 from $56,999 million in the similar period of last year. The R&D spending of Gilead Sciences went up by 72.4 per cent to $3,890 million from $2,257 million basically due to acquisition of Nimbus Apollo, Inc and higher clinical studies. Teva Pharma's R&D expenditure moved up by 32.3 per cent to $1,427 million from $1,079 million in the corresponding period of last year as it paid Regeneron $250 million under collaborative agreement. Though, Novartis' R&D expenditure declined marginally to $6,455 million from $6,463 million, it remained top spender on R&D among 15 companies. Similarly, Pfizer's R&D spending increased only by 0.3 per cent to $5,360 million from $5,342 million.
• The R&D expenditure of GSK declined sharply by 10.2 per cent to $3,414 million from $3,800 million in the last period. The R&D expenditure of AbbVie, Amgen and Bristol-Myers declined by 0.7 per cent, 7.2 per cent and 11.6 per cent respectively. Merck & Co, Eli Lilly and Bayer posted growth of over 10 per cent in R&D spending during the first nine months of 2016.
• The cost of sales increased by 3.5 per cent to $113 billion from $109 billion in the last period. Their marketing, administration, general and other expenditure increased by 15.2 per cent to $118 billion from $102 billion. The lower growth in net sales and higher expenditure put pressure on operating profit during first nine months. The operating profit of 15 companies declined by 11.2 per cent to $97 billion from $109 billion basically due to setback to GSK, Pfizer, Novartis, Sanofi, Gilead Sciences, AstraZeneca, Teva Pharma and Nova Nordisk. 
• GSK's operating profit declined sharply by 84 per cent to $2,605 million from $16,038 million due to the Novartis transaction and other non-core items in the previous period. The Novartis transaction completed on March 2, 2015 and so the reported year-to-year results include nine months of sales of the vaccines and consumer healthcare products acquired from Novartis and exclude the former GSK Oncology business. Pfizer's operating profit declined by 18.7 per cent to $7,575 million from $9,319 million and that of Gilead by 18 per cent to $13,588 million. Astra Zeneca also reported lower operating profit of $2,369 million, de-growth of 21.7 per cent. 
• Merck, AbbVie and Bristol-Myers posted healthy growth in operating profit of 31.2 per cent, 29.5 per cent and 94.2 per cent respectively. Further, Bayer, Amgen Eli Lilly also posted double digit growth during the first nine months of 2016. 
• The net profit of Pfizer, Novartis, GSK, Gilead Sciences and AstraZeneca declined significantly during the first nine months ended September 2016. Novartis net declined by 66 per cent to $5,762 million from $16,738 million due to gain of $12.8 billion from divestment in the previous period. However, Merck, Abbvie, Amgen, Teva Pharma, Bristol-Myers, Bayer, J&J and Nova Nordisk managed to improve their bottom line. The net profit of Sanofi declined by one per cent to $4,398 million from $4,444 million and that of Eli Lilly improved by 1.9 per cent to $1,966 million from $1930 million in the similar nine months of last year. 
• Thus, the growth in top line and bottom line remained under pressure during nine months period ended September 2016 with limited outcome from R&D activities. Based on this performance, the outlook remains gloomy for the year 2016.

Global pharma cos, dismal performance