In many ways, 2017 was an uncertain year for biopharma as a new, erratic administration entered the White House and federal government. The industry came under fire early with then-President-elect Donald Trump's comments that it was "getting away with murder" on pricing, but more than a year later, biopharma has been spared real reform.
One certainty? The year wasn't without drama. On several occasions, industry leaders butted heads with the president, most notably when Merck & Co. CEO Kenneth Frazier, angered by the president's response to a white supremacist rally in Charlottesville, Virginia, quit Trump's executive advisory board. Pfizer sued Johnson & Johnson in a lawsuit that could reshape the U.S. biosim market; Merck suffered a costly cyberattack; Teva announced a massive round of downsizing, and much more. GlaxoSmithKline, Eli Lilly, and Teva each got new CEOs, while Novartis announced an upcoming CEO transition.
At the same time, drugmakers chalked up scientific advancements never before seen: Novartis and Gilead won the first CAR-T approvals for Kymriah and Yescarta, respectively. Spark Therapeutics followed those up with a nod for gene therapy Luxturna. They're the first in a wave of next-gen, superpricey treatments for cancer and genetic diseases that will challenge existing payment models.
Already, since Luxturna's approval, Spark has been working to modernize payment systems for the therapy, including not only outcomes-based contracts that other drugmakers have used but also new methods of spreading payments over multiple years. The list price? A whopping $850,000.
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Meanwhile, as pharma continues to face scrutiny on pricing, payer partnerships and mergers promise to trigger tectonic shifts in the drug supply chain—and that's in part a response to the very same pricing problem. Cigna agreed to scoop up leading independent pharmacy benefit manager Express Scripts, while CVS Health and Aetna are merging. Together, the two deals mean the largest three pharmacy benefits managers by market share will be tied to insurers. A year ago, only one was.
Plus, UnitedHealthcare and Aetna have pledged to return drug rebates to some consumers, addressing a complaint by pharma that patients don't benefit from tough behind-the-scenes negotiations. In recent years, the spread between drug list prices and net prices has grown, but patients haven't benefited, because they pay their share based on list prices, and many face much larger deductibles than in years past.
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President Donald Trump has pledged on many occasions to take on drug prices, and last week his administration laid out its plan. The administration called for more negotiating and incentives to bring down list prices, but not importation or Medicare price negotiations. Overall, many experts said pharma dodged policy proposals that could seriously disrupt its business model.
As talk continues in Washington, D.C., many states have taken up drug pricing, creating another headache for pharma. During Trump's first year in office, industry trade group PhRMA significantly boosted its lobbying spend to represent drugmakers on patent issues, Bayh-Dole march-in rights, importation, Medicare price negotiations and more.
The year wasn't without changes from the U.S. government, though. In December, the Trump administration and Congress ushered through tax reform, which biopharma companies have overwhelmingly praised. Since the reform, a wave of new M&A has hit the industry, most recently in April with the massive tie-up between Takeda and Shire, both ex-U.S. companies.
New FDA chief Scott Gottlieb, M.D., has put through significant changes of his own. He's pushed for more generic competition and promised to "curtail gaming" of regulations that allow companies to extend their patent monopolies. And those are just two of the changes he's pushed at the FDA to lower costs; Fortune named him No. 6 on its list of the world's best leaders for 2018.
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In Gottlieb and HHS Director Alex Azar, a former Eli Lilly executive, the pharma industry has allies in Trump's administration. It remains to be seen just how the administration will try to fulfill its promise on drug prices, but early reports indicate it'll be through tactics proposed by Gottlieb, plus value-based pricing and other largely industry-friendly approaches.
At this year's J.P. Morgan Healthcare conference in San Francisco, Eli Lilly CEO David Ricks said the industry has allies in office and had "better take advantage of that." This year is the "time for action" on pricing, he added.
Among the top 15 drugmakers in 2016 and 2017, revenue grew slightly to $551 billion last year—from about $524 billion in 2016. Eleven of the Big Pharmas posted growth in 2017, while Pfizer, Gilead, Amgen and AstraZeneca revenues shrank from year to year. Next year, pharma watchers can expect to see a new addition to the list in Takeda, which is scooping up Shire in a $62 billion deal. Together, the companies would have generated more than $30 billion in 2017 sales, good enough for No. 8 among the top industry players.
Many of the drugmakers provided their 2017 sales in local currencies, so FiercePharma used an average conversion rate for the year of 1.13 euros to dollars and .098 Swiss francs to dollars. GlaxoSmithKline provided its sales in U.S. dollars.
As we continue to track biopharma developments through 2018, here are the top 15 drugmakers by 2017 revenue. If you have any questions or comments, please get in touch.
Posted on Tuesday May 22