Business
Table 1: Personnel and R&D spending versus productivity for the top 12 global pharmaceutical companies in 2018 COMPANY 1 2 3 4 5 6 7 8 9 10 11 12 Pfizer (USA) Roche (Switzerland) J & J (USA) Sanofi (France) Merck (USA) Novartis (Switzerland) AbbVie (USA) Amgen (USA) GSK (UK) BMS (USA) AstraZeneca (UK) Eli Lilly (USA) PERSONNEL R&D SPEND 90,200 93,700 134,000 106,500 69,000 125,000 29,000 21,500 98,500 23,700 61,100 38,700 $7.84 billion $8.72 billion $6.97 billion $5.72 billion $9.76 billion $7.92 billion $4.15 billion $3.76 billion $4.69 billion $4.82 billion $5.41 billion $4.97 billion REVENUES $53.7 billion $45.6 billion $40.7 billion $39.3 billion $37.7 billion $34.9 billion $32.8 billion $23.7 billion $23.0 billion $22.6 billion $22.1 billion $24.6 billion a The Productivity Index (PI) was calculated as follows: (PI = {[Revenues/personnel] x [Revenue/R&D spend]}/106) DRUG PIPELINE 192 191 216 179 191 223 103 146 191 134 207 112 4.08 2.55 1.77 2.54 2.11 1.23 8.94 6.94 1.14 4.46 1.48 3.14 PIa
was required for preclinical studies and ~51% was due to all Phase I-III clinical trials3. These significant Drug Discovery and Development (DDD) costs necessitate that each large pharmaceutical company must launch two to three New Molecular Entities/New Therapeutic Biologics (NMEs/NTBs) per year to “
...achieve their growth objectives based on product innovation”4. Yet in 2018 only three companies, Pfizer (four NMEs approved by FDA) AstraZeneca (two NMEs) and Eli Lilly (two NMEs), accomplished such a goal5. In order to achieve approval rates of two to
three NMEs/NTBs per annum, large pharmaceuti- cal companies require an army of skilled and expensive personnel. The top 12 global pharma- ceutical companies alone employ a total of ~890,000 employees worldwide (see Table 1). The three companies that successfully launched two to three NMEs/NTBs in 2018 – Pfizer, AstraZeneca and Eli Lilly – possess significantly different work- force personnel of ~90,200, ~61,000 and ~38,700 individuals respectively. In addition these ‘success- ful’ companies were ranked fourth (Pfizer), fifth (Eli Lilly) and 10th (AstraZeneca) in our Productivity Index evaluation (Table 1). The PI is predicated on workforce size, R&D spending and
Drug DiscoveryWorld Summer 2019
annual revenues and is calculated as follows: PI = {[Revenues/Personnel] x – [Revenue/R&D Spend]}/106). Further perusal of Table 1 reveals that there does not appear to be a clear correlation between productivity and the number of personnel, nor the dollar amount spent on R&D by individual pharmaceutical companies. A lack of clarity continues to permeate large phar-
maceutical companies in their quest for improved productivity. It is also clear that increasing personnel or R&D spending does not appear to provide a facile solution to productivity. Last year pharmaceu- tical companies had a record 59 NMEs/NTBs approved by the FDA. However, small-sized phar- maceutical companies led this effort. Large-pharma- ceutical companies only contributed 32% of the FDA approved NMEs/NTBs in 20185. The flexibil- ity and nimbleness of smaller companies compared to their larger, slower-moving counterparts allows for dexterity of thinking and a willingness to rapidly adapt and adopt new approaches. This has encour- aged large pharmaceutical companies to rely more on smaller companies to fill the former’s pipelines through licensing or acquisition deals. In turn, this has fuelled the growth of small pharmaceutical com- pany formation and development. However, the
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