Roche Leads in R&D Spending, Sanofi Shows Largest Increase: Top 10 Pharma Companies by R&D Investment

MedNet News, June 5 — Of the 59 new drugs approved by the U.S. FDA last year, as many as 38 (64%) originated from emerging biopharmaceutical companies. In drug research and development, small biotechnology firms have already played a role disproportionate to their size. However, traditional pharmaceutical giants still hold the upper hand in terms of financial investment. FierceBiotech pointed out that last year, the top 15 global pharmaceutical companies by sales collectively invested over $100 billion in R&D.

 

In terms of R&D expenditure, Roche, Johnson & Johnson (J&J), and Novartis continue to set an unreachable benchmark with their substantial investments. Last year, Roche once again topped the list with $11 billion in spending (including its diagnostics business).

 

In fact, the rankings and amounts of R&D expenditures among pharmaceutical giants have not changed significantly in recent years. Roche has remained at the top for several consecutive years, although its R&D spending decreased by nearly $500 million compared to 2016. Meanwhile, Sanofi increased its R&D expenditure from $5.45 billion in 2016 to $6.6 billion in 2018 due to several merger and acquisition transactions. Merck, which is preparing over 1,000 clinical trials for its star product Keytruda, saw its R&D spending drop from $10.33 billion in 2017 to $9.75 billion in 2018, but this still represents a significant increase compared to $7.19 billion in 2016.

 

Below are the ten pharmaceutical companies with the highest R&D expenditures in 2018:

 

 

 

To cut costs and increase investment in R&D, Roche streamlined its marketing and sales departments last year, a trend that is expected to continue in the coming years.

 

Roche is facing challenges brought about by the expiration of patents for its three flagship products—Rituxan (rituximab), Herceptin (trastuzumab), and Avastin (bevacizumab)—which collectively accounted for 36% of the company’s revenue last year. Currently, its “star” product Ocrevus is experiencing rapid growth, alongside other blockbuster drugs such as the PD-L1 inhibitor Tecentriq, the hemophilia A treatment Hemlibra, and the influenza medication Xofluza.

 

In addition, Roche has 16 new drugs in its late-stage R&D pipeline. Two of them will receive review results this year: polatuzumab for lymphoma and entrectinib for NTRK fusion-positive solid tumors.

 

Roche’s R&D budget is not entirely allocated to new drugs; it also includes improvements to existing medications. For example, research on ranibizumab (Lucentis) involves implantable devices that extend the dosing interval to six months or even a year. Additionally, combination therapy trials involving trastuzumab and pertuzumab are being conducted.

 

Roche’s M&A activities also underscore its R&D ambitions. Last year, its partnership with 4D Molecular Technologies marked its first step in establishing a presence in gene therapy, while this year’s acquisition of Spark Therapeutics further strengthens Roche’s footprint in this field.

 

Of course, Roche’s R&D pipeline inevitably saw several projects “fail,” with the most closely watched being the termination of research on its new Alzheimer’s disease drug, crenezumab.

 

 

Like Roche, Johnson & Johnson’s R&D budget also includes non-pharmaceutical businesses. For Johnson & Johnson, last year seemed somewhat “unlucky,” as several projects acquired through transactions encountered setbacks one after another. In October last year, Johnson & Johnson announced the termination of the use ofInfantClinical trials of a drug for the treatment of respiratory syncytial virus (RSV). The drug was acquired through its 2014 acquisition of Alios Biopharma; one month later, Johnson & Johnson discontinued the rheumatoid arthritis drug FR104, which it had in-licensed in 2016 with a $11 million upfront payment.

 

Johnson & Johnson continues to double down. Last year, it acquired global rights to Arrowhead’s RNAi drug for hepatitis B for $175 million. In October, Janssen, a subsidiary of Johnson & Johnson, paid a $300 million upfront fee to collaborate with Argenx on the development of cusatuzumab, a CD70 antibody for treating various cancers, including leukemia. Meanwhile, Janssen and its partner Legend Biotech reported positive results from a Phase 1/2 clinical trial of their CAR-T therapy.

 

This year, Johnson & Johnson’s Spravato was approved for market launch, marking the first antidepressant with a novel mechanism of action in 30 years.

 

 

With over 1,000 clinical trials launched for the blockbuster drug Keytruda, it is no surprise that Merck & Co.’s R&D budget has increased significantly in recent years. As combination therapies gain momentum, many pharmaceutical companies are exploring various regimens involving Keytruda. While this trend naturally benefits Merck, some analysts caution against excessive reliance on a single product to avoid a scenario similar to AbbVie’s dependence on adalimumab (Humira). The acquisition of Immune Design this year represents Merck’s effort to strengthen its R&D pipeline.

 

Last year, Merck & Co.’s highly anticipated investigational anticancer drug suffered a major setback when it presented data at the ESMO Congress showing that the STING agonist MK-1454, as monotherapy, was ineffective in treating advanced solid tumors and lymphomas. STING agonists are a hot area of research in oncology, with companies such as Johnson & Johnson and Novartis also investing in this field; however, the data released by Merck has dampened enthusiasm for this therapeutic approach.

 

In addition to Keytruda, Merck & Co. is also heavily investing in its vaccine business, with four products currently in late-stage development, including vaccines for Ebola virus, varicella-zoster virus, and pneumococcus; the latter will directly compete with Pfizer’s Prevnar in the market.

 

 

Under the leadership of Vas Narasimhan, Novartis undertook a major overhaul of its R&D operations last year. Approximately 90 projects were cut (accounting for 20%), thereby sharpening the focus on cutting-edge new drug development.

 

This year is set to be a bumper year for Novartis, with four drugs expected to receive regulatory review outcomes. Among them, the highly anticipated SMA gene therapy Zolgensma and the PI3K inhibitor alpelisib for breast cancer treatment have recently been approved. The multiple sclerosis drug Mayzent was also approved in March this year.

 

In last year’s series of portfolio “slimming-down” initiatives, Novartis sold its infectious diseases business to Boston Pharma and also divested its consumer health joint venture with GlaxoSmithKlineHealth CareEnterpriseshares were sold to the latter. In addition, Novartis sold its oral solid dosage forms business to Aurobindo and spun off its eye care business unit, Alcon; there are rumors that its generics business unit, Sandoz, may also be spun off.

 

Currently, Novartis is at the forefront of the cell therapy field with its CAR-T product Kymriah. Last year, the company further solidified its position in gene therapy by acquiring AveXis for $8.7 billion. Currently, Novartis’s gene therapy pipeline covers therapeutic areas including ocular diseases, neurological disorders, and hearing loss.

 

 

Pfizer’s R&D spending increased by 4% year over year last year, with the majority of funds directed toward mature pipeline assets, such as the Phase III clinical trials of abrocitinib, a JAK1 inhibitor for dermatitis, and the development of a Clostridioides difficile vaccine. Pfizer has gained a leading position in the latter area after Sanofi withdrew from its own R&D efforts in 2017 following failures. Additionally, Bavencio, an oncology immunotherapy co-developed by Pfizer and Merck KGaA, is in the final stretch of development and has incurred substantial costs. The drug has already been approved for the treatment of bladder cancer and Merkel cell carcinoma, and it will next compete with offerings from companies such as Bristol Myers Squibb (BMS) and Merck & Co.

 

On the other hand, due to clinical trial failures, Pfizer terminated two studies of domagrozumab for intermediate-stage Duchenne muscular dystrophy, abandoned research on the third-generation EGFR inhibitor mavelertinib for non-small cell lung cancer, discontinued development of an anti-IL7R antibody for type 1 diabetes, and dropped part of its CAR-T pipeline as well as research on CD137 agonist antibodies.

 

This year, Pfizer has a total of 100 projects in development, including 26 in Phase III clinical trials, 28 in Phase II clinical trials, and 11 in the pre-registration stage. If Pfizer wants to achieve its goal of launching 15 "blockbuster" drugs between 2015 and 2022, it will need to make every effort to sustain the vitality of these research pipelines.

 

Under this pressure, Pfizer underwent a major restructuring last year—consolidating all its innovative drug divisions under the Pfizer Biopharmaceuticals Group, alongside consumerHealthThe product division was separated with the aim of streamlining management processes and freeing up more cash for research and development and business expansion.

 

 

Among the ten listed companies, Sanofi recorded the largest increase in R&D investment. Last year, due to leadership changes, Sanofi adjusted its R&D pipeline—terminating 13 clinical-stage projects and 25 preclinical research projects—while refocusing on oncology immunotherapy, rare diseases, and rare hematologic disorders.

 

A number of new drugs successively entered Phase III clinical trials last year, including the hemophilia drug fitusiran, the multiple myeloma drug isatuximab, and Bioverativ’s therapy for the rare blood disorder cold agglutinin disease. As these pipeline assets collectively approached their delivery milestones, Sanofi’s total R&D expenditures saw a significant increase.

 

On the other hand, the company suffered setbacks in its diabetes drug development. Its dual GLP-1/glucagon receptor agonist for mid-stage diabetes was terminated last November due to tolerability issues. Two cancer antibody-drug conjugates (ADCs) also failed to progress as expected—one CA6-targeting ADC was discontinued during Phase II clinical trials for triple-negative breast cancer, while an anti-LAMP-1 antibody drug for solid tumors was halted in clinical trials for multiple sclerosis.

 

Recently, Sanofi has been attempting to reduce its reliance on external partners in research and development while strengthening its capabilities in basic research. Currently, approximately 50% of the compounds in its drug pipeline originate from internal R&D channels, and Sanofi aims to increase this proportion to 70% within the next 5 to 10 years.

 

 

Bristol Myers Squibb (BMS) maintained its R&D spending last year at the same level as the previous year, following its recent $74 billion acquisition of CelgenePharmaceuticals(Celgene) — For BMS, which executed the largest merger and acquisition deal in the pharmaceutical industry, skepticism has been incessant; many doubt whether Opdivo (O drug) can achieve its projected sales volume.

 

This is because the data on Opdivo combination therapy released by the company at last year’s ASCO meeting were insufficient to secure an invincible position for BMS, and the bladder cancer pipeline data it announced in February this year also failed to attract sufficient attention.

 

Like its competitor Merck & Co., Bristol Myers Squibb (BMS) has in recent years focused most of its efforts on targeted oncology drugs and immunotherapies, launching Yervoy and Opdivo in succession. However, unlike Merck, Opdivo has failed to match the clinical data profile or sales performance of Keytruda. For BMS, the priority now is to accelerate the advancement of its clinical pipeline and pursue more combination therapy regimens. Some commentators have noted that whether the acquisition of Celgene will truly drive the clinical progress of Opdivo remains to be seen.

 

BMS currently has 38 compounds in development, with its pipeline covering multiple therapeutic areas, including cancer, cardiovascular diseases, and fatty liver disease.

 

 

For AstraZeneca, 2018 was a year of transition across all business segments, marking the resumption of sales growth. In recent years, AstraZeneca has launched a portfolio of new oncology drugs, including the EGFR inhibitor Tagrisso (osimertinib) for non-small cell lung cancer, the PARP inhibitor Lynparza (olaparib) for ovarian and breast cancers, and the tumor immunotherapy drug Imfinzi (durvalumab).

 

As of the end of 2018, AstraZeneca (AZ) had a total of 22 projects in late-stage development. In terms of novel drugs, the only candidate was PT010, a single-inhaler fixed-dose triple therapy consisting of budesonide [an inhaled corticosteroid (ICS)], glycopyrronium bromide [a long-acting muscarinic antagonist (LAMA)], and formoterol fumarate [a long-acting β2-agonist (LABA)].

 

Among AstraZeneca’s mid-stage pipeline candidates, the novel AKT inhibitor capivasertib for the treatment of triple-negative breast cancer and prostate cancer, PT027 (budesonide/albuterol) for as-needed use in asthma, and tezepelumab, a potential first-in-class TSLP inhibitor for the treatment of severe asthma, have shown the most prominent performance.

 

However, in 2018, AstraZeneca’s list of discontinued projects was also quite extensive. The results of the MYSTIC trial, which evaluated Imfinzi (durvalumab) in combination with the CTLA-4 inhibitor tremelimumab for the treatment of stage IV non-small cell lung cancer (NSCLC), ultimately failed to meet the primary endpoint of improving overall survival (OS). Additionally, the company halted the global Phase 3 clinical trial of lanabecestat, an oral beta-secretase 1 (BACE) inhibitor developed in collaboration with Eli Lilly for the treatment of Alzheimer’s disease.

 

 

For Eli Lilly, 2018 was a year of mixed fortunes. In June, it discontinued the Phase 3 trial of lanabecestat, a BACE inhibitor developed in collaboration with AstraZeneca (AZ), for the treatment of Alzheimer’s disease, and in November, it halted research on another early-stage BACE inhibitor.

 

Notably, oncology drugs remain a key focus of Eli Lilly’s R&D pipeline. Last May, Eli Lilly invested $1.6 billion in Armo Biosciences and its lead asset, pegilodecakin, which has demonstrated promise as both a monotherapy and in combination therapies for various types of cancer.

 

In the first week of 2019, Eli Lilly announced the acquisition of Loxo Oncology for $8 billion. Through this acquisition, Eli Lilly will obtain Loxo’s portfolio of targeted cancer therapies, including a 50% equity stake in Vitrakvi, an already marketed pan-tissue anticancer NTRK inhibitor; LOXO-292, another pan-tissue RET inhibitor; LOXO-305, a BTK inhibitor in Phase I clinical trials; and several preclinical candidates.

 

 

GlaxoSmithKline’s (GSK) core strengths are concentrated in three key areas: respiratory diseases, HIV/AIDS, and vaccines. As early as 2014, GSK undertook a major business restructuring by swapping its entire oncology portfolio for Novartis’ vaccine business assets (excluding Novartis’ influenza vaccines). With the rise of immuno-oncology, GSK has re-established oncology as one of its strategic priorities, while simultaneously streamlining certain early-stage R&D projects to enhance research and development efficiency.

 

Meanwhile, GSK continues to pursue external collaborations for its oncology business. Data show that GSK’s oncology pipeline currently includes two Phase II projects, comprising a TCR-T cell therapy and an antibody-drug conjugate targeting BCMA, as well as six Phase I projects targeting BET, OX40, TLR4, PI3K, and other targets.

 

In December 2018, GSK announced the acquisition of Tesaro for $5.1 billion. Tesaro’s flagship product, Zejula (niraparib), is an oral poly(ADP-ribose) polymerase (PARP) inhibitor currently approved in the United States and Europe for the treatment of ovarian cancer. In addition to Zejula, Tesaro’s pipeline included investigational anti-cancer agents targeting PD-1, Tim-3, and other pathways. However, some Wall Street analysts argued that Tesaro’s drug portfolio had limited overlap with GSK’s, making it difficult to achieve synergistic effects.

 

Clearly, GSK is firmly committed to expanding into the oncology business. In February this year, GSK and Merck KGaA announced a global strategic collaboration alliance to jointly develop M7824 (bintrafusp alfa), a bifunctional fusion protein-based cancer immunotherapy targeting PD-L1/TGF-β, with the total value of the deal reaching €3.7 billion.