Steady growth for big pharma in 2019

Major drug firms generally had a good year in 2019, with many posting healthy growth in sales and earnings compared with 2018. At the same time, companies are reimagining their research organizations and narrowing the scope of their businesses.

Merck & Co. saw earnings in 2019 increase by about 15% based on a sales rise of nearly 11%. Much of that improvement can be attributed to its immuno-oncology drug Keytruda, which brought in $11 billion in sales—a jump of nearly 60% from 2018.

In tandem with its annual earnings report, Merck said it would spin off three units—women’s health, legacy brands, and biosimilars—into an independent, publicly traded company. The move will narrow Merck’s focus to oncology, vaccines, hospital products, and animal health, while shrinking its manufacturing footprint by roughly 25%.

GlaxoSmithKline also detailed plans to separate into two companies, one focused on biopharmaceuticals and the other on consumer health care. The split, which was anticipated, comes a little more than a year after GSK and Pfizer created a consumer health joint venture controlled by GSK.

The hiving is part of CEO Emma Walmsley and chief scientific officer Hal Barron’s ongoing project to reshape GSK. The British firm wants to position itself as an expert in a few areas: the immune system, the application of human genetics, and the use of new technologies like functional genomics and machine learning. As such, the company licensed out or ended 14 drug programs in 2019, including vaccines for HIV, tuberculosis, and influenza.

A number of other assets are under review, including the prescription dermatology business. GSK is also laying off 720 people in its vaccines group in Belgium, is continuing to simplify its manufacturing network, and is eyeing other cost-cutting in an effort to save a total of $3.1 billion by 2022.