Q1 2024 MNC Pharma Surge: Nine Giants Report Double-Digit Revenue Growth Amid Strategic Restructuring

Recently, major MNCs have successively released their Q1 2024 financial reports, including AstraZeneca, Roche, Sanofi, Johnson & Johnson, and Novartis, among others. From the performance perspective, the overall trend shows growth.But at the same time, layoffs by major MNCs and pipeline cuts have been happening frequently, making the first quarter of 2024 full of opportunities and challenges.

Table 1: 2024Q1 MNC Revenue

Data source: 2024 Q1 financial reports of various companies

On April 16, 2024, Johnson & Johnson announced its Q1 2024 earnings report, with sales of $21.383 billion, a year-on-year increase of 2.3%.

Among them, the sales of innovative drugs amounted to 13.562 billion US dollars, mainly contributed by the revenue from oncology and immunology drugs. The total revenue from oncology drugs was 4.814 billion US dollars, increasing by 17.1% year-on-year, while the revenue from immunology drugs was 4.247 billion US dollars, increasing by 3.3% year-on-year. The sales of the oncology drug Darzalex (daratumumab) were 2.692 billion US dollars, increasing by 18.9% year-on-year, and the sales of the immunology drug Stelara (ustekinumab) were 2.451 billion US dollars, increasing by 0.3% year-on-year.

Johnson & Johnson's layoffs continue. In February 2024, Johnson & Johnson announced the closure of a research and development facility in California spanning nearly 200,000 square feet, with 55 employees permanently laid off.

On April 25, 2024, Merck announced its Q1 financial report for 2024, with sales reaching $15.8 billion, a year-on-year increase of 9%.

In terms of products, the sales of KEYTRUDA reached 6.9 billion US dollars, increasing by 20% year-on-year, and the sales of HPV nine-valent vaccine-Gardasil/Gardasil 9 were 2.2 billion US dollars, increasing by 14% year-on-year. The sales of these two drugs accounted for more than 50% of the total sales.

Similarly, Merck & Co. is also undergoing layoffs. Just months after its $11.5 billion acquisition of Acceleron Pharma, Merck announced it would lay off 143 employees.

On April 24, 2024, Roche announced its Q1 financial report for 2024, with sales of 14.399 billion Swiss francs, including pharmaceutical business revenue of 10.921 billion Swiss francs. Excluding the impact of COVID-19 related products, it increased by 7% year-on-year.

Mainly due to the strong sales of drugs for severe diseases, such as the multiple sclerosis drug Ocrevus, the ophthalmic drug Vabysmo, and the Hemophilia A drug Hemlibra, etc.,Especially the ophthalmic drug Vabysmo, the first and only bispecific antibody approved for ocular use, with sales increasing by 108% year-over-year.The following table shows Roche's top ten drugs by sales this quarter.

Table 2: Top 10 Roche Products by Sales in Q1 2024

Data source: Roche's Q1 2024 financial report

Regarding its product pipeline, Roche has halted several ongoing research pipelines, including Belvarafenib, camonsertinib, RG6286, RG6163, and RG6319. Since the third quarter of last year, Roche has removed 20% of new molecules from its pipeline. The termination of some pipelines this time is part of a broader realignment, and the company stated that the focus of removal was on assets with "lower likelihood of success."

In terms of layoffs, Roche announced in early February that it expects to lay off hundreds of R&D personnel.

On April 25, 2024, AstraZeneca announced its Q1 financial report for 2024, with sales reaching $12.679 billion, a year-on-year increase of 19%.

In terms of products, the sales of Dapagliflozin reached $1.892 billion, increasing by 45% year-on-year. The sales of Osimertinib were $1.595 billion, up 15% year-on-year, and the sales of Durvalumab were $1.113 billion, increasing by 33% year-on-year. The following table shows the top ten products by sales of AstraZeneca.

Table 3: Top 10 AstraZeneca Products by Sales in Q1 2024

Data Source: AstraZeneca Q1 2024 Earnings Report

On April 26, 2024, AbbVie announced its Q1 2024 earnings report, with sales reaching $12.3 billion, roughly flat compared to the same period in 2023.

Immunology has always been a key focus area for AbbVie, with drug sales accounting for more than 40% of the total. As Humira's patent has expired, its sales have continued to decline. This quarter, Humira's sales were $2.27 billion, a year-on-year decrease of 35.9%.

Despite the significant drop in Humira's sales, many might predict that AbbVie's overall immunology drug sales would also plummet. However, this is not the case, as AbbVie has two "new workhorses," Skyrizi and Rinvoq. Skyrizi generated $2.008 billion in sales, representing a 47.6% year-over-year increase, while Rinvoq achieved $1.093 billion in sales, marking a 59.3% year-over-year growth. The total revenue from immunology drugs amounted to $5.371 billion, reflecting a 3.9% decrease year-over-year. The strong performance of these two drugs largely offset the impact of Humira's patent expiration on AbbVie.

On April 25, 2024, Bristol-Myers Squibb announced its Q1 financial report for 2024, with sales of $11.865 billion, a year-on-year increase of 5%. However, the company reported a net loss of $11.9 billion, compared to a net profit of $2.262 billion in the same period last year.

In terms of products, the main contributors to BMS's performance are still Eliquis (Apixaban), Opdivo (O drug), and Revlimid (Lenalidomide). Among them, Eliquis generated revenue of 3.720 billion US dollars, with sales increasing by 9% year-on-year; Opdivo generated revenue of 2.078 billion US dollars, with sales decreasing by 6% year-on-year; Revlimid generated revenue of 1.669 billion US dollars, with sales decreasing by 5% year-on-year.

Bristol-Myers Squibb is currently undergoing significant reforms, planning to cut $1.5 billion in costs by 2025, including laying off more than 2,000 employees.

On April 23, 2024, Novartis announced its Q1 2024 financial results, reporting total revenue of $11.829 billion, representing a 10% year-over-year sales increase. The double-digit growth rate was driven by the following top ten drugs, among which the new long-acting siRNA lipid-lowering drug Leqvio surged an impressive 139%.

Table 4: Novartis Product Revenue in Q1 2024

Data source: Novartis Q1 2024 earnings report

In terms of layoffs, a Novartis spokesperson stated that Novartis plans to reorganize its global development team over the next few years, cutting approximately 440 R&D positions in Switzerland and up to 240 positions in the United States.

On April 25, 2024, Sanofi announced its Q1 2024 earnings report, with sales reaching €10.464 billion (approximately $11.399 billion), representing a year-over-year increase of 6.7%.

In terms of products, Dupixent, the flagship product in the autoimmune pipeline, achieved sales of 2.835 billion euros, representing a year-on-year increase of 24.9%. In terms of vaccines, sales reached 1.177 billion euros, marking a year-on-year growth of 5.6%, driven by the strong performance of the RSV vaccine Beyfortus. However, due to the seasonal impact on the use of this vaccine, Beyfortus sales are expected to stagnate in Q2 2024.

Pipeline-wise, multiple pipelines of Sanofi have been put on hold.

(1) Frexalimab (CD40L monoclonal antibody), a drug for the treatment of the immune disease Sjögren's syndrome, has been suspended from further research due to unsatisfactory results in Phase 2 clinical trials.

(2) The GCS inhibitor Venglustat was used to treat GM2 gangliosidosis, but the AMETHIST Phase 3 study showed no positive trend in clinical endpoints, leading to the suspension of research for this indication.

(3) The Phase 2 study of RIPK1 inhibitor Oditrasertib for the treatment of Amyotrophic Lateral Sclerosis (ALS) has also been put on hold because the trial failed to meet the primary endpoint of improvement based on the revised ALS Functional Rating Scale.

In terms of layoffs, Sanofi is streamlining the personnel structure of its R&D department and prioritizing the field of immunology, which means a large number of employees will be laid off. In addition, Sanofi's global restructuring plan is currently underway. A company spokesperson confirmed that 67 employees at a plant in Ghent, Belgium were dismissed, while 32 employees at Sanofi Belgium headquarters in Diegem were also let go.

On April 25, 2024, Gilead released its Q1 2024 financial report. The report showed that Gilead's total sales for the quarter reached $6.7 billion, including $6.6 billion in product sales, representing a 5% year-over-year increase. The main drivers of its sales growth were drugs in the HIV, oncology, and liver disease fields.

(1) HIV Drugs:Compared with the same period in 2023, sales of HIV products in the first quarter of 2024 increased by 4% to 4.3 billion US dollars. Among them, the sales of Biktarvy were 2.9 billion US dollars, a year-on-year increase of 10%.

(2) Hepatic drugs:Q1 2024 sales were $737 million, a 9% increase year-over-year. Veklury sales decreased by 3% to $555 million, primarily impacted by the decline in COVID-19-related hospitalization rates.

Pipeline: Gilead completely abandons the CD47 antibody drug Magrolimab, with all six related clinical trials suspended. The main reason is that Magrolimab's safety and efficacy did not meet expectations.

On April 24, 2024, Biogen released its Q1 financial report for 2024. The report showed that Biogen's total revenue for this quarter was $2.291 billion, a 7% decrease compared to $2.463 billion in the same period last year. The net profit was $393.4 million, slightly higher than the net profit of $387.9 million in the same period last year. In terms of products:

• In the field of multiple sclerosis:TECFIDERA and VUMERITY combined revenue was $382 million, basically flat compared to the same period last year. AVONEX and PLEGRIDY combined revenue was $244 million, flat compared to the same period last year. TYSABRI revenue was $431 million. In Q1 2024, the total revenue in the multiple sclerosis field was $1.076 billion, a year-over-year decrease of 4.4%.

• Rare Disease Field:SPINRAZA, QALSODY, and SKYCLARYS collectively contributed $424 million in sales, with SPINRAZA alone contributing $341 million, but its sales decreased by 23% year-over-year.

• Biosimilar Field:Contributed $197 million in sales, slightly higher than $192 million in the same period of 2023.

Total sales of all products in Q1 2024 were $1.712 billion, slightly lower than $1.763 billion in the same period in 2023.

In terms of layoffs, Biogen announced as early as 2023 that it would lay off more than a thousand employees, accounting for 11% of the total workforce.

Four Major Factors of Pharmaceutical Companies' Layoffs

According to Fierce Biotech, 57 rounds of layoffs were reported in the first three months of 2024, exactly the same as the number reported in the same period last year. This figure is almost twice the total of 30 rounds of layoffs reported in the first quarter of 2022.

Based on the operating conditions of various enterprises, the reasons for layoffs can be divided into the following four categories:

The COVID-19 dividend has disappeared.Companies like Pfizer and Moderna invested heavily during the COVID-19 pandemic and reaped substantial returns, but as the pandemic waned, their profits significantly diminished.

Post-M&A Structural Optimization.In recent years, mergers and acquisitions have been in full swing. After the acquisition, pipelines that do not fit the company's current development or have lower profitability are often cut off.

Cost Reduction and Efficiency Improvement. Affected by the general environment, the financial situation faced by most pharmaceutical companies is relatively severe at present; even these global top pharmaceutical enterprises have to consider a "slimming" plan for cost reduction and efficiency improvement.

Clinical failure, NDA rejected.When a drug is announced to have failed, the pipeline is bound to be abandoned. Once the pipeline ceases to exist, the team to which the current pipeline belongs will also face layoffs.

Summary

Recently, major MNCs have successively released their Q1 2024 earnings reports. The financial statements show that most MNCs have achieved year-on-year sales growth. However, even so, layoffs and pipeline cuts by some MNCs are still ongoing. Following the layoffs from 2022 to 2023, the wave of layoffs in 2024 continues, and perhaps what we see now is just the beginning. He who laughs last, laughs best—pharmaceutical companies that can endure will surely shine more brilliantly in the future.

References:

1. Q1 2024 Financial Reports of the Above Companies

2. https://www.fiercebiotech.com/biotech/bristol-myers-cutting-15b-costs-less-two-years-2000-plus-employees-impacted-2024