Tuesday, September 24, 2013

Big Pharma's R&D spending is growing. The numbers

From here
Innovation is everything when it comes to the pharmaceutical sector. Behind those glorious 75%-plus gross margins associated with branded and patented drugs is billions of dollars worth of research and development money that keeps the sector running.
 
Ultimately, branded drugs have a finite time period where they can be sold exclusively without generic competition of 20 years. However, the clock on patented drugs starts ticking when the Food and Drug Administration grants a biopharmaceutical company the right to investigate a new drug in clinical trials. Therefore, you can knock off an average of eight to 10 years from of a drugs' patented lifespan before it even makes it to market. This should give you a better indication of why innovation and R&D spending is so vital to big pharmaceutical companies.
 
 
According to research firm Kalorama Information, global R&D spending in the pharmaceutical sector increased from just $35.3 billion in 1996 to more than $95 billion in 2009, so we know the investable money is there. Let's have a look at the 10 biggest pharmaceuticals R&D budgets in fiscal 2012 and see how they compare to corporate R&D spending in 2009.

Company2012 R&D Spending% Change From 2009
Roche (NASDAQOTH: RHHBY  ) $9.3 billion7%
Pfizer $9.1 billion23%
Merck (NYSE: MRK  ) $8.5 billion52%
Johnson & Johnson$7.7 billion16%
Novartis (NYSE: NVS  ) $6.7 billion(5%)
Sanofi$6.7 billion7%
GlaxoSmithKline$5.6 billion0%
Eli Lilly (NYSE: LLY  ) $5.3 billion28%
AstraZeneca$4.5 billion6%
Bristol-Myers Squibb (NYSE: BMY  ) $3.9 billion12%

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