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2015 Was Mostly Stable For Drug Firms

Finance: Drug pricing, product introductions, and portfolio shuffles boil down to a mirror of 2014

by Rick Mullin
December 7, 2015 | APPEARED IN VOLUME 93, ISSUE 48

Major drug companies came into 2015 with the wind at their backs thanks to a surge in new drugs with blockbuster potential. But price pressure and competition against products that lost patent protection whittled away at revenue growth.

On balance, according to IMS Health, worldwide pharmaceutical sales grew about 5% to $958 billion from June 2014 to June 2015, the most recent period for which the firm offers data.

The lineup of the world’s top pharmaceutical firms saw little change. Gilead Sciences rose one position to eighth place on the strength of sales of its hepatitis C drugs Sovaldi and Harvoni. Abbvie just edged out Amgen for tenth place, also rising one spot.

Six of the top companies will experience slight drops in revenue this year. GlaxoSmithKline is typical, posting a modest slide in sales from $35.7 billion in 2014 to an expected $35.4 billion in 2015. Nearly holding steady was an achievement, however, considering the potential impact of a business swap with Novartis in which GSK sold its oncology portfolio and related R&D for about $16 billion and acquired Novartis’s vaccine business for $5.25 billion.

Financial markets remained bullish on pharmaceuticals through the first half of the year. U.K.-based analysts EvaluatePharma estimated in July that the sector was on track to introduce 50 new drugs in 2015 that would reap $18.6 billion in sales over the next five years. The biotech sector defied doomsayers in the first half, but signs of a downturn arose in August and September when biotech stock indexes took big dives.

Analysts generally saw an even mix of positive and negative forces in 2015 that are likely to keep the sector on a steady course going into 2016. Michael Kleinrock, research director at IMS Health, notes that the sector enjoys a fairly strong runway of new, patented products.

Jeffrey R. Greene, head of life sciences transaction advisory services at Ernst & Young, says it is difficult to judge results on anything other than a company-by-company basis. The impact of patent exclusivity and generics competition varies from door to door as well, he says.

Greene does not see the biotech market on a definite downward trajectory, noting that this summer’s dive may have been more a market correction than a sustained change. “It will be interesting to see how it plays over the next 12 months,” he says. “We still see a robust appetite for biotech. The market isn’t spooked.”



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