Pharma R&D stimulates global economy

According to the report, Pfizer spent GBP3.88 billion for R&D in 2006 while Johnson & Johnson (J&J) invested GBP3.64 billion in research. While Pfizer pushed itself to the top spot among global innovators, J&J climbed from eighth to third position in the table. Pfizer and J&J are joined in the scoreboard’s top 25 global R&D spenders in 2006 by five other pharmaceutical companies: GlaxoSmithKline (seventh with GBP3.46 billion), Sanofi-Aventis (12th, GBP2.97 billion), Roche (15th, GBP2.76 billion), Novartis (16th, 2.74 billion) and Merck & Co (18th, GBP2.44 billion). At the same time Ford Motor and DaimlerChrysler which previously held the top two positions in the table, slipped to second and fifth places respectively.

The pharmaceutical and biotechnology projects account for the 19.4% of big-company R&D investment worldwide, followed by technology hardware and equipment (17.7%), automotive enterprises (16.8%), electronics (7.4%), and software and computer services (7.2%). A comparison of the top 10 pharmaceutical companies’s research spending as a percentage of sales places Amgen at the top of the list: the survey shows that almost a quarter of the company’s sales revenue was redirected to research. If R&D spending is weighed against profits, Sanofi-Aventis gets the top spot with 93% of the company’s profit invested in research.

According to the survey, UK drug majors GlaxoSmithKline and AstraZeneca each invested less than half their income into R&D, the lowest proportions among the big-spending innovating pharma companies featured in the survey. All of the 15 companies at the top of the pharmaceutical and biotechnology section are headquartered either in the US or Europe. Ranked by spending on R&D, the top Japanese companies are 16th (Takeda), 17th (Daiichi Sankyo) and 18th (Astellas) and the top Indian companies are Ranbaxy Laboratories, Dr Reddy’s Laboratories and Sun Pharmaceutical Industries.

The survey also considered the geographic spread of sales into account, and compared companies in different sectors by the reach of their business across regional markets where comparable data were available. According to the survey, GSK and Sanofi-Aventis top the pharmaceutical section, but each of these big spenders has its business concentrated in one regional market: GSK depends on the North American market for 48% of its sales while Sanofi-Aventis derives 43% of its sales revenue in Europe. But surprisingly the three largest Japanese investors in pharmaceutical R&D sell much more in markets closer to home. Takeda’s sales in markets outside Europe and North America account for 57% of total sales, Daiichi Sankyo 70% and Astellas 59%.

The survey highlighted another downside in spending on pharmaceutical R&D: “Despite a continuous increase in R&D spending over the past 10 years, the productivity of R&D as measured by the number of new molecular entities and biologics approved by the approval agencies has declined.”