Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
Check Out the Companies with the Highest Outlays for Developing New Drugs
Big pharma may be retreating from internal R&D, but big biotech has more than made up for it with its own ramped-up research spending. This year’s Top 25 Biopharma R&D Spenders plunked down $100.441 billion on research, including $94.108 billion from the top 20; up 6% from the $88.643 billion spent in 2011 by the Top 20 on GEN’s first such list.
How much less is big pharma spending? Not too much less than four years ago, actually. The 10 largest heritage drug developers on the List shelled out a combined $69.077 billion in 2014, less than 1% below the $69.459 billion spent in 2011. The six biotechs appearing in both years’ Lists spent nearly 50% more on R&D in 2014 than three years earlier, their combined total jumping since 2011 to $14.85 billion. Their increases in R&D are larger than those of big pharmas—though it should be noted that only four companies on this List spent less on R&D in 2014 than 2013, though two companies have alerted investors they plan to cut back in 2015.
Reasons for the big biotech R&D surge are almost as varied as the companies involved. Biotech giants have spent recent years finalizing numerous late-stage trials for products that only lately have been launched to market. The most successful of those big-biotech drugs is Gilead Sciences’ Sovaldi, which zoomed to #2 on last week’s GEN List of Top 25 Best-Selling Drugs of 2014, cracking the eight-figure sales benchmark.
Also, drug developers big and small have been gobbling each other up through mergers and acquisitions, many of which involved buyers that continued the R&D programs of the companies they bought. Another less obvious reason: The collaborations that are taking the place of internal R&D often involve upfront payments and promises to pay for a partner’s research, both funded through R&D budgets. One company on this List agreed to spend more than $1 billion upfront.
Following is this year’s list of 25 biopharmas, ranked by their GAAP spending on R&D in 2014, as reported in annual filings or press releases. Each company is listed by name, 2014 R&D spending, 2013 R&D spending, and the percentage change from 2013.
This year’s List omits one company that has appeared in past years’ lists of Top R&D Spenders. Merck KGaA was not scheduled to release full-year 2014 results until after the deadline of this List (March 3).
2014 R&D spending: $1.067 billion
2013 R&D spending: $0.933 billion
% Change: 14.4%
2014 R&D spending: $1.086 billion1,2
2013 R&D spending: $0.617 billion
% Change: 76.0%
2014 R&D spending: $1.271 billion
2013 R&D spending: $0.860 billion
% Change: 47.8%
#22. Baxter International
2014 R&D spending: $1.421 billion
2013 R&D spending: $1.165 billion
% Change: 22.0%
#21. Teva Pharmaceutical Industries
2014 R&D spending: $1.488 billion
2013 R&D spending: $1.427 billion
% Change: 4.3%
#20. Daiichi Sankyo
2014 R&D spending: $1.644 billion (¥196.314 billion)
2013 R&D spending: $1.588 billion (¥189.644 billion)
% Change: 3.5%
#19. Astellas Pharma
2014 R&D spending: $1.682 billion (¥200.906 billion)
2013 R&D spending: $1.515 billion (¥180.906 billion)
% Change: 11.1%
#18. Biogen Idec
2014 R&D spending: $1.893 billion
2013 R&D spending: $1.444 billion
% Change: 31.1%
#17. Novo Nordisk
2014 R&D spending: $2.063 billion (DKK 13.762 billion)
2013 R&D spending: $1.760 billion (DKK 11.733 billion)
% Change: 17.3%
2014 R&D spending: $2.101 billion (€1.878 billion)3
2013 R&D spending: $1.981 billion (€1.771 billion)3
% Change: 6.0%
2014 R&D spending: $2.431 billio4
2013 R&D spending: $2.226 billion4
% Change: 9.6%
#14. Gilead Sciences
2014 R&D spending: $2.854 billion5
2013 R&D spending: $2.120 billion5
% Change: 34.6%
#13. Takeda Pharmaceutical
2014 R&D spending: $2.945 billion (¥351.800 billion)
2013 R&D spending: $2.752 billion (¥328.736 billion)
% Change: 7.0%
2014 R&D spending: $3.297 billion
2013 R&D spending: $2.855 billion
% Change: 15.5%
2014 R&D spending: $4.121 billion6
2013 R&D spending: $3.929 billion
% Change: 4.9%
#10. Bristol-Myers Squibb7
2014 R&D spending: $4.534 billion8
2013 R&D spending: $3.731 billion
% Change: 21.5%
#9. Eli Lilly9
2014 R&D spending: $4.734 billion
2013 R&D spending: $5.531 billion
% Change: (14.4%)
2014 R&D spending: $5.313 billion (£3.450 billion)10
2013 R&D spending: $6.042 billion (£3.923 billion)10
% Change: (12.1%)
2014 R&D spending: $5.397 billion (€4.824 billion)11
2013 R&D spending: $5.337 billion (€4.770 billion)
% Change: 1.1%
2014 R&D spending: $5.579 billion12
2013 R&D spending: $4.821 billion
% Change: 15.7%
#5. Merck & Co.
2014 R&D spending: $7.180 billion13,14
2013 R&D spending: $7.503 billion14
% Change: (4.3%)
2014 R&D spending: $8.393 billion15,16
2013 R&D spending: $6.678 billion15,16
% Change: 25.7%
#3. Johnson & Johnson
2014 R&D spending: $8.494 billion
2013 R&D spending: $8.183 billion
% Change: 3.8%
2014 R&D spending: $9.086 billion
2013 R&D spending: $9.071 billion
% Change: 0.2%
2014 R&D spending: $10.367 billion (CHF 9.895 billion)
2013 R&D spending: $9.713 billion (CHF 9.270 billion)
% Change: 6.7%
1 Figures are GAAP R&D expenses. Company also released non-gap “adjusted” R&D spending figures of $987.1 million for 2014, reflecting adjustments to R&D that included contingent consideration fair value adjustments, write-off of contingent consideration, accretion expense, operating results for assets held for sale, brand-related milestone payments and upfront option payments, accelerated depreciation and product transfer costs, acquisition-integration-and-restructuring expenses, acquisition accounting fair market value adjustment to stock-based compensation, and acquisition-related settlements.
2 Company has disclosed a “full year 2015 standalone financial forecast” that it expects to spend “approximately $1.1 billion” in non-GAAP R&D investment.
3 Figures represent R&D expenses for the pharmaceuticals unit of the company’s Bayer HealthCare unit, including special items. Bayer also furnished figures for HealthCare R&D expenses before special items: $2.099 billion (€1.876 billion) in 2014, up 13.5% from $1.849 billion (€1.653 billion) in 2013.
4 Figures are GAAP R&D expenses. The increase in GAAP R&D expenses was attributed primarily due to increased clinical trial activity and an in-process R&D (IPR&D) impairment charge, partially offset by lower upfront payments for collaboration arrangements. Company also reported adjusted R&D figures of $1.651 billion in 2014, up 9.6% from $1.506 billion in 2013. Adjusted R&D expenses included expenses related to advancing clinical trials and expenses for collaboration-related payments to partners.
5 Figures are GAAP R&D expenses. Company also furnished non-GAAP expense figures of $2.585 billion in 2014, up 32.7% from $1.948 billion in 2013. The non-GAAP figures do not include stock-based compensation expenses, restructuring expenses, acquisition-related expenses, and acquisition-related contingent consideration re-measurement
6 Company cited the addition of R&D programs from Onyx Pharmaceuticals, the drug developer acquired for $9.7 billion in a deal completed in 2013; as well as support for later-stage clinical programs, offset partially by reduced expenses associated with marketed product support and Discovery Research & Translational Sciences.
7 Company has issued 2015 financial guidance that stated in part: “Research and development expenses decreasing in the low-single-digit range.”
8 2014 figure includes $278 million in “Upfront, milestone and other payments” expenses and $343 million in in-process R&D impairments expenses
9 Company has issued 2015 guidance to investors that revised downward its forecast of anticipated R&D spending this year, from $4.8 billion to $5.0 billion, to between $4.7 billion and $4.9 billion
10 Company also furnished “core” R&D figures that do not include onetime expenses. Core R&D spending fell to $4.795 billion (£3.113 billion) in 2014, down 8.3% from $5.228 billion (£3.394 billion) in 2013.
11 Company said its 2014 increase in R&D expense reflected higher spend in monoclonal antibodies development programs and Phase IV studies in rare diseases and multiple sclerosis, which were partially offset by internal costs savings.
12 Figure includes $497 million in restructuring expense and $141 million in “tangible amortization and impairments.” AstraZeneca also furnished “core” or non-GAAP R&D figures of $4.941 billion for 2014, up 15.7% from $4.269 billion in core R&D spending in 2013, “reflecting the expansion of the late-stage pipeline.”
13 Company said the full-year decline reflected targeted cost reductions and lower clinical development spending resulting from portfolio prioritization. In October 2013, company launched a restructuring of its R&D and commercial operations that included elimination of 8,500 jobs worldwide and identification of four key therapeutic areas: Oncology, diabetes, acute hospital care, and vaccines. For 2015, company projected that its R&D expenses are expected “to be modestly above 2014 levels.”
14 Company also furnished non-GAAP R&D figures of $6.532 billion for 2014, down 8.3% from $7.123 billion in 2013.
15 Company attributed the increase in its adjusted R&D expense “primarily due to incremental expenses associated with the ongoing Phase 3 programs for bococizumab, palbociclib, ertugliflozin and certain other new drug candidates, as well as potential new indications for previously approved products, especially for Xeljanz.” Company has also issued 2015 financial guidance projecting that its adjusted R&D expenses will be between $6.9 and $7.4 billion
16 Pfizer also furnished non-GAAP R&D figures of $7.153 billion for 2014, up 9.1% from $6.554 billion in 2013. Non-GAAP figures do not include onetime “certain significant items.” In 2014, significant items consisted mostly of a $1.163 billion charge associated with a collaboration with Merck KGaA, announced in November 2014, to jointly develop and commercialize an investigational anti-PD-L1 antibody now in development as a potential treatment for multiple types of cancer. The charge included an $850 million upfront cash payment as well as an additional amount of approximately $300 million reflecting the fair value for certain co-promotion rights for Xalkori granted to Merck KGaA. Significant items also included an $83 million charge for “Implementation costs and additional depreciation––asset restructuring” related to Pfizer cost-reduction and productivity initiatives