The good, the bad and the ug­ly for the top 15 spenders in the glob­al drug R&D busi­ness: 2018

As a gen­er­al rule, the top 15 R&D groups in bio­phar­ma are known for keep­ing a very steady hand on spend­ing. I’ve been fol­low­ing this group for more than a decade now, and it hasn’t been un­usu­al see­ing lit­tle year-to-year vari­a­tions in the to­tal spend.

But that’s no longer the case.

Four gi­ant com­pa­nies — J&J, Bris­tol-My­ers Squibb, Glax­o­SmithK­line and Cel­gene — all in­creased R&D spend­ing last year by more than a bil­lion dol­lars each, ac­cord­ing to their re­cent year-end tal­lies. That rep­re­sents some big bets on late-stage ef­forts dur­ing an in­tense and grow­ing ri­val­ry to score big­ger mar­kets in on­col­o­gy and oth­er key dis­ease fo­cus­es. And sev­er­al will con­tin­ue to wa­ger fresh bil­lions in the year to come, as an­a­lysts now keen­ly wait to see which of these big play­ers — such as Am­gen or Pfiz­er — pull off some new ac­qui­si­tions in 2018.

The very biggest play­ers, such as Basel-based Roche and No­var­tis, will like­ly keep hunt­ing those bolt-ons they like best.

As we’ve been track­ing in our on­go­ing sur­vey of biotech ex­ecs, this is all play­ing out at a time that ex­per­i­men­tal drug val­u­a­tions are at an all-time high, show­ing few signs of stag­nat­ing now. Bris­tol-My­ers just helped prove that with its record pact to part­ner with Nek­tar.

Over the past year we’ve seen a con­tin­ued pull­back from brick-and-mor­tar ops in Chi­na, as Glax­o­SmithK­line helped il­lus­trate with its re­treat from Shang­hai. But J&J is help­ing blaze a path to­ward new al­liances with Chi­nese up­starts, just as Cel­gene did when it part­nered with BeiGene on PD-1. Chi­na is be­com­ing a huge new in­flu­ence on drug de­vel­op­ment, and they have the sci­en­tif­ic ca­pa­bil­i­ty to make some stun­ning ad­vances with the help of a reen­er­gized CF­DA mak­ing it eas­i­er to gain an ap­proval there.

Along the way, Chi­nese biotechs are be­com­ing so pro­lif­ic that some cat­e­gories could be­come com­modi­tized by a slew of me-toos.

Re­or­ga­ni­za­tion nev­er stops in Big Bio­phar­ma, ei­ther. That can mean in­creased spend­ing at a com­pa­ny like GSK, which tore up its US ops sev­er­al years ago to knit some­thing new in the Philadel­phia area. Lil­ly has made some deep cuts, pre­sum­ably ahead of new deal­mak­ing. Am­gen keeps trim­ming staff. And Pfiz­er demon­strat­ed its zeal for the ax when it cut off neu­ro­sciences in a bru­tal stab. Take­da has un­der­gone a com­plete re­make over the past two years, and like the rest of the pack, it’s build­ing more ex­ter­nal­iza­tion in­to the re­search struc­ture.

The race for PD-1/L1 dom­i­na­tion is far from over, even though a tsuna­mi of ex­per­i­men­tal meds would seem to be set­ting up some cheap­er al­ter­na­tives. As a re­sult, the lead­ers are dis­tin­guish­ing them­selves with new com­bos that can top any sin­gle ther­a­py. And we’ve moved from pi­o­neer­ing ap­provals in CAR-T to a race for CAR-T 2.0, with ag­gres­sive play­ers like Gilead and Cel­gene step­ping in to fight it out with a pow­er­house team at No­var­tis.

In this field, scor­ing two or three sig­nif­i­cant new drug ap­provals in one year is good, maybe even great. But with old fran­chis­es fad­ing fast, it’s the com­pa­nies that can stay ahead with dom­i­nant late-stage pipelines that promise a steady stream of block­buster OKs that earn the most re­spect. That re­quires round-the-clock vig­i­lance, a keen abil­i­ty to de­sign and ex­e­cute the right tri­als and one eye to look over your shoul­der to see who’s catch­ing up. All while the in­dus­try’s ROI for the gi­ants con­tin­ues to shrink.

Whew.

And with­out more ado, here are the top 15 com­pa­nies by R&D bud­gets.

This is End­points News’ third an­nu­al look at the top 15 spenders in the glob­al R&D busi­ness. Read the 2016 edi­tion and 2017 fol­low-up here.

Get in­stant ac­cess to this re­port with a paid End­points News sub­scrip­tion. In­cludes a de­tailed analy­sis of each top spender and the play­ers in­volved.

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