Top performing pharmaceutical companies are employing a mix of business approaches to succeed in a particular therapeutic or geographical area, according to a new industry benchmarking report recently launched by healthcare intelligence provider GlobalData.

The new report* suggests that as there is no one-size-fits-all strategy for success in the pharmaceutical industry, major pharmaceutical companies are being forced to find innovative strategies to compensate for losses stemming from the patent cliff. This has led to an invigorated mergers and acquisitions market and, for companies like Pfizer and Abbott, a renewed focus on the research and development that is at the core of success in the pharmaceutical business.

GlobalData estimates that total corporate revenue from the top 25 pharma companies increased 6.8% year-to-year, from $634.9 billion in 2010 to $677.9 billion in 2011. While this growth was solid, it did not reach even half of the growth rate achieved in 2011 over 2010, when revenues from these Top 25 companies increased 11.7% from $568.5 billion. GlobalData attributes the slower growth rate to these companies experiencing significant revenue erosion due to the impending ‘patent cliff’, which is having a negative impact on the financial performance of leading companies such as; Pfizer, AstraZeneca and GlaxoSmithKline.

While the patent cliff had a negative impact on branded drug makers, it has created a windfall for generics companies, waiting to pounce on these patent expires. Companies such as; Watson, Teva, and Mylan all posted double-digit revenue gains during 2011. Teva remained the leader in the generic drug market during 2011, with $10.1 billion in revenue, followed by Sandoz, Novartis’ generic drug unit. However, Watson made a splash with its purchase of rival Actavis for $5.9 billion in April 2012. The purchase gave Watson a larger footprint in the rapidly growing emerging markets in Eastern Europe and 300 pipeline projects, creating the 3rd largest generic drug maker, surpassing Mylan.

The patent cliff and the exorbitant cost of developing new drugs have created a landscape of inorganic growth, as drug makers’ offset revenue declines through acquisition. One major purchase happened In April 2011, when Sanofi acquired Genzyme for $20.1 billion, giving the French drug maker a portfolio of enzyme replacement therapy drugs indicated to treat rare diseases.

GlobalData believes factors such as the increasing use of generic subscriptions and the uncertainty of healthcare reform legislation has created a climate where drug makers are looking outside of the U.S., to emerging markets, for growth opportunities. Meanwhile, the economies of Europe are gridlocked over the best action to take in dealing with a number of its countries’ sovereign debt – namely, Portugal, Ireland, Greece and Spain.
 

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NOTES TO EDITORS

This report is an essential source of information and analysis on the top players in the branded and generic pharmaceutical markets. Using detailed financial analysis, GlobalData has ranked the top performers in the pharmaceutical market, forming a basis for in-depth analysis of the factors driving the industry into the future. The report identifies the key trends shaping and driving the global industry, and provides insight on the prevalent competitive landscape and the emerging strategies expected to significantly alter the market positioning of the existing market leaders. This report was built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData’s team of industry experts.

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