Pfizer Plunges, Hengrui Slides, CSPC Drops Off, Yunnan Baiyao Returns: 2024 Global Top 50 Pharma Rankings Released

Jun 15, 2024 21:15 CST Updated 21:15

Johnson & Johnson

Medical Device R&D and Manufacturer

Hengrui Pharma

Innovative and High-Quality Pharmaceutical Developer

CSPC

Innovative Drug Research and Development, Manufacturer

IRA, drug pricing review; supply chain disruptions; digital regulation, compliance audits; patent expirations, strong threats from biosimilar competition… Under the influence of various factors, the top 50 global pharmaceutical companies are encountering unprecedented challenges. The pace and methods by which they support and expand their businesses have changed significantly from before.

Writing | Runyu

Editor | Dunhe

Today, *PharmExec*, the American magazine for pharmaceutical executives, released the 2024 TOP50 Global Pharmaceutical Companies list. This marks the 24th consecutive year the list has been published. Based on data from Evaluate Pharma, a global pharmaceutical market research institution, the list includes the prescription drug sales revenue, annual R&D investment, and core product revenue of the top 50 pharmaceutical companies in the past year.

The two most notable aspects of the list are the ranking changes of the top 10 pharmaceutical companies and the status of Chinese pharmaceutical companies on the list.

The biggest variable in the TOP10 lies in Pfizer. After maintaining an unparalleled leading position for two consecutive years as the dominant player,This time, Pfizer's ranking dropped to 6th place, and the new leader became Johnson & Johnson, followed by AbbVie, Novartis, Merck, and Roche.For Pfizer, which has cut costs three times in seven months and suspended large-scale mergers and acquisitions, it remains highly uncertain whether internal adjustments can help its ranking rebound next year. As for the other multinational corporations (MNCs) in the TOP10, although their rankings have not changed significantly, all of them are caught up in integration, layoffs and restructuring, adjusting product priorities, or the impatience of mergers, acquisitions, and business development (BD). Besides, Novo Nordisk and Eli Lilly, whose rankings have risen to 11th and 12th respectively, may break into the top 10 next year.

This time, four Chinese pharmaceutical companies made the list: Yunnan Baiyao (33rd), China Biologic Products (38th), Shanghai Pharmaceuticals (42nd), and Hengrui Pharma (48th).

After "disappearing" for two years, Yunnan Baiyao has returned to the top 50 global pharmaceutical companies, ranking as the highest among several Chinese companies. China Biologic Products and Shanghai Pharmaceuticals have shown the most stability; the former has made the list for six consecutive years, while the latter has been on it for five years, with little change in their rankings.

The steady ones on the list also include Hengrui Pharma. However, since 2022, Hengrui's ranking has continuously declined for three years, from 32nd place, down to 43rd, and further to today’s 48th position. Additionally, CSPC, one of the "three key players" in innovation transformation, has officially "dropped off" the list after consecutive years of decline.

Which Chinese Companies Will Rise, Fall, or Disappear?

Four Chinese enterprises have entered the top 50 global pharmaceutical companies, including a well-known traditional Chinese medicine company, a pharmaceutical distribution giant with over 100 billion yuan in revenue, and two leading local innovative Pharmas.

The top-ranked is Yunnan Baiyao.In recent years, whenever Yunnan Baiyao made it to the list, it ranked first in China. However, it did not appear on the list in 2022 and 2023. This time, its return to the list set a new record for itself, climbing to 33rd place.

In 2023, Yunnan Baiyao's revenue reached 39.111 billion yuan, a year-on-year increase of 7.19%; its non-net profit was 3.764 billion yuan, a year-on-year increase of 16.45%, reaching a record high for the same period. Regarding its major business segments, their revenues saw varying degrees of growth in 2023: The pharmaceuticals business group achieved main business revenue of 6.481 billion yuan, with single-digit growth during the same period; the Traditional Chinese Medicine Resources Business Group segment generated external revenue of 1.71 billion yuan, a year-on-year increase of approximately 22%; in pharmaceutical distribution, the provincial pharmaceutical company achieved main business revenue of approximately 24.5 billion yuan, a year-on-year increase of 5.63%.

At the shareholders' meeting held in April this year, Yunnan Baiyao set an ambitious goal: to achieve 100 billion yuan in revenue and a market value of 100 billion US dollars within the next decade.

The most consistently stable performers on the list over the years have been Shanghai Pharma and China Biologic Products.

Shanghai Pharma's revenue from the pharmaceuticals manufacturing sector exceeded 26 billion yuan in 2023. According to statistics from the American magazine "Pharmaceutical Executive," Shenmai Injection, Tanshinone Ⅱ A Sodium Sulfonate Injection, and Hydroxychloroquine Sulfate Tablets are Shanghai Pharma's three best-selling drugs.

China Biologic Products generated a total revenue of approximately 26 billion yuan in 2023. The best-selling drugs included Anlotinib (Fukewei) and Magnesium Isoglycyrrhizinate Injection (Tianqing Ganmei). Notably, last year, the revenue from innovative products of China Biologic Products increased by 13.3% year-on-year to 9.89 billion yuan, nearing the 10-billion-yuan mark. During the same period, the proportion of innovative product revenue rose from 11% in 2015 to 38%, with the number of innovative drugs increasing from 2 to 11.

By 2025, the number of innovative biopharmaceutical products in China is expected to reach 20, with nearly half of the revenue coming from these innovative products.

Besides China Biologic Products, the performance of Hengrui Pharma and CSPC, the "three musketeers" of innovative transformation, has been quite volatile in the top 50 pharmaceutical companies ranking.

CSPC, which is not on this list, encountered some challenges in 2023, marking the first time in nearly five years that revenue increased but profits did not.In its main business segments, the performance of the anti-tumor and cardiovascular treatment fields in the finished drug business segment has declined.

Hengrui, whose ranking has continuously declined over the past three years, bears certain pressure under the market's gaze of high expectations.In 2023, Hengrui Pharma achieved a revenue scale of nearly 23 billion yuan, with a net operating cash flow of 7.644 billion yuan, marking a significant year-on-year increase of 504.12%. The company's performance has returned to a growth trajectory, driven by its three top-selling drugs: Ai Rui Ka, Ai Tan, and Pyrotinib. However, despite this strong performance, the capital market remained "unimpressed," with the stock price falling for two consecutive days after the earnings release. This reaction reflects investors' higher expectations for the leading player as well as concerns over the capitalization of R&D expenses.

But since 2023, Hengrui Pharma has had three major highlights worth paying attention to.

First, the revenue from innovative drugs broke through the 10 billion yuan mark, accounting for 46.6% of total revenue; second, significant progress was made in internationalization, with five licensing agreements totaling over $4 billion reached in 2023. Then, in May this year, Hengrui Pharma granted overseas companies paid licenses for the development, production, and commercialization abroad of three GLP-1 products, with a total transaction value as high as $6 billion. Third, the level of R&D investment is high. In 2023, Hengrui invested over 6 billion yuan in cumulative R&D, ranking 8th globally in terms of the number of pipeline projects, with over 90% of its R&D pipeline being self-developed.

MNCs: Collectively Falling into the "Out-of-Focus" Moment

Guilty or not guilty of mergers and acquisitions? Which track’s C-position should be quickly purchased with money? How to formulate a restructuring plan, how many people to lay off, and how many factories to close?

This time, the "giants" in the top 50 pharmaceutical companies have collectively been wounded by the turbulent internal and external situations, with their respective weaknesses and shortcomings becoming apparent from 2023 to the present. Faced with the next steps, some MNCs are even unable to firmly determine whether their choices are right or wrong.

If we only look at the ranking changes,Pfizer's "ups and downs" are the most intuitive. Its biggest problem lies in the insufficient early R&D capabilities and certain chronic issues in the management of post-merger pipelines.

Limited by its in-house R&D capabilities, Pfizer has missed numerous opportunities to establish itself in emerging technology markets. Notably, CAR-T is one such example, and GLP-1 is another (last year saw a second setback with an oral GLP-1R agonist). Just days ago, Pfizer also announced the failure of its Phase III clinical trial for PF-06939926, a gene therapy for Duchenne Muscular Dystrophy (DMD).

Besides the two products of COVID-19 vaccine and oral medication, 80% of Pfizer's products with over $1 billion in sales in 2023 were derived from external acquisitions or BD before 2010. The top three best-selling drugs (Comirnaty, Prevnar 13, and Ibrance) have each faced challenges: one has declined significantly after the end of the COVID-19 pandemic, another has lost its market monopoly, and the third has underperformed compared to "later entrants."

In the past two years, Pfizer has continued to rely on aggressive large-scale acquisitions for product portfolio expansion. However, when its performance plummeted and even began showing quarterly negative growth, coupled with significant stock price volatility, Pfizer took a hard look at the situation and started cutting losses. Earlier this year, it announced a $4 billion "cost adjustment plan," followed by a recent announcement of a new "sales cost reduction initiative" aimed at saving approximately $1.5 billion by the end of 2027.Recently, Pfizer once again emphasized the suspension of large-scale acquisitions.

In contrast to Pfizer's reluctant "tightening" of its M&A stance, BMS has made it clear that going forward, if there are suitable M&A targets, the company will adopt an open attitude towards development.

However, since 2023, there have been various large-scale acquisitions (such as Mirati, a KRAS inhibitor company, Karuna, which holds schizophrenia assets, and RayzeBio, a radiopharmaceutical company),Resulted in BMS's debt level reaching a new high.

But the core products involved in several recent large-scale acquisitions all have future uncertainties. Taking the acquisition of radiopharmaceutical assets as an example, BMS recently announced that it has suspended the recruitment of new patients for the Phase III trial of the radiopharmaceutical RYZ101 due to a shortage of isotope supply.

Moreover, after the patent for lenalidomide expired, the speed of its market contraction far exceeded expectations. However, BMS's ability and efficiency to "digest" large acquisitions urgently need improvement, and new "blockbuster" products are in dire need of nurturing. Based on Q1 performance this year, the performance of BMS's new drugs has been less than ideal, particularly the sales of cardiac drug Camzyos (Mavacamten), psoriasis drug Sotyktu (deucravacitinib), and CAR-T therapy Abecma, all of which were collectively lower than earlier forecasts. Notably, in Q1 this year, BMS reported a net loss of $11.9 billion.

In this regard, BMS CEO Christopher Boerner stated in a restructuring announcement: Plans to cut $1.5 billion in costs by 2025, with a key step being "laying off 2,200 employees," which accounts for approximately 6% of the global workforce, including streamlining the management team.

Since the beginning of this year, it's not just Pfizer and BMS; in fact, approximately 70% of the top 20 pharmaceutical companies have been making adjustments.

Novartis (3rd) announced an adjustment plan, intending to restructure its global R&D department over the next two to three years, which will result in the elimination of approximately 680 positions.

Roche (5th) has opted to cut some positions in its pharmaceutical product development department, planning to lay off hundreds of employees in the product development team. Its subsidiary, Genentech, has also made significant adjustments, cutting over 400 jobs, along with a management reshuffle at the beginning of the year.

Sanofi (9th) continued its layoffs this year under the "Play to Win" strategy, strengthening the reallocation of capital to meet the needs of its biopharmaceutical business and further optimizing its cost structure. For instance, it shut down an NK cell therapy company acquired earlier and laid off 100 employees from a plant in San Francisco this month.

GSK (10th) has conducted a "reshuffle" and adjustments in its personnel structure. In March this year, GSK confirmed that an undisclosed number of employees would lose their jobs following the $2 billion acquisition of Canadian Bellus Health last summer.

Bayer (17th) revealed details about its restructuring plan in Q1 this year. In the first three months, Bayer cut 1,500 full-time employees, approximately two-thirds of whom held managerial positions. A few days ago, industry media reported that Jens Vogel, Bayer's Senior Vice President and Head of Global Biotechnology, departed amid the organizational restructuring.

Takeda (13th) plans to invest 140 billion yen (approximately 900 million U.S. dollars) in company-wide restructuring activities to address the sharp drop in profits, with the goal of increasing the core operating profit margin by 1% to 2.5% annually starting from 2025.

The Inflation Reduction Act (IRA), drug pricing reviews; supply chain disruptions; digital regulation, compliance reviews; the expiration of patents for blockbuster drugs, and the strong threat of biosimilar competition... Under the influence of various factors, the top 50 global pharmaceutical companies are encountering unprecedented challenges. The rhythm and methods by which they support and expand their businesses have changed significantly. Amidst the interlocking strategic adjustments of multinational corporations (MNCs), layoffs and reorganizations are one aspect, while pipeline optimization is another. However, cost-cutting is ultimately aimed at better "spending."

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