With 50 in 2021, the number of FDA approvals has stabilized at a high level in recent years and compares favorably to an average of 43 approvals over the last 10 years. The Dow Pharma index went up but has lagged behind the S&P 500 whereas biotech stocks took a beating in 2021, especially the small caps. (By the end of 2021 XBI was down ca. 20% compared to the beginning of the year and down by 33% versus its peak in February 2021, a trend that has continued in early 2022.)

In our survey the R&D productivity of the top 30 biopharma companies has remained relatively stable since 2018. The largest therapy area (TA) in terms of total value continues to be oncology (32%), followed by systemic-anti infectives (23%) and central nervous system (CNS; 11%). In spite of oncology leading all TAs by total value, it is also the area that saw the largest absolute decline in productivity as a number of older high value drugs fade out of our ranking – Keytruda, Opdivo, Tecentriq, Tagrisso and Darzalex (the value of products launched >5 years ago slowly fades out in our calculation). It will come as no surprise that the largest gain was recorded with systemic anti-infectives and mRNA vaccines. It is precisely the latter technology that has catapulted its pioneers to the top of the ranking as BioNTech SE takes the #1 slot in the R&D productivity ranking, closely followed by Moderna, Inc. in #2. 

The Meteoric Rise Of COVID mRNA Vaccines

In 2020 COVID shook up the biopharma world with uncertainty and clinical trial pausations, in 2021 approvals of multiple SARS-Cov2 vaccines and anti-viral drugs turned the tide for their sponsors, most prominently the mRNAvaccines by Moderna and BioNTech/Pfizer Inc. The 2021 sales for BioNTech / Pfizer’s Comirnaty summed up to $36bn, and $17bn for Moderna’s COVID-19 vaccine. These sales figures easily qualify both as the most successful drug launches ever, both individually and as a class. Even though there is huge uncertainty as to the outlook for these vaccines as SARS-Cov2 slowly turns into an endemic virus, there is still room for growth with the pandemic continuing well into 2022 and vaccination rates in some countries remaining substantially below the estimated 80%+ required for herd immunity. Analysts therefore estimate the 2022 market for the mRNA COVID-19 vaccines to drop only slightly below 2021 sales figures.

The key question for both Moderna and BioNTech is whether they can diversify away from COVID vaccines into other areas. BioNTech’s strategy, and personal motivation of the two founders Uğur Şahin and Özlem Türeci, point into the direction of cancer as a major area of focus. As a result, the early pipeline (up to Phase II) includes mostly cancer assets. Whether the promise of mRNA vaccines in cancer will play out and end an era of disappointment in the field of therapeutic cancer vaccines remains to be seen. As a potential risk mitigation, BioNTech has also diversified its technology base into other more established modalities in the cancer field such as antibodies, TCRs and CAR-Ts.

The fact that both BioNTech and Moderna have interesting pipelines beyond COVID vaccines is reflected in their high scores in momentum ranking (Moderna #1, BioNTech #3) that tracks the value of the pipeline versus R&D investment. Both companies are too new to show up in the corporate growth ranking, which tracks how companies have performed with respect to sales, EBITDA and market cap growth.

Jiangsu Hengrui, Vertex And Lilly Round Up The Top 5

Last year’s surprise winner, Chinese company Jiangsu Hengrui Medicine Co., Ltd. is in #3 slot, driven by approved PD-1 antibody camrelizumab (>$2.5bn in projected 2026 sales) and EGFR/Her2 kinase inhibitor pyrotinib (>$600m projected 2026 sales). Still there are some questions around pipeline sustainability beyond me-too versions of established modes of action developed primarily for the Chinese market and Jiangsu’s globalization strategy (pipeline momentum rank is only #12, which however in part may be a reflection of lower analyst coverage of Chinese companies during the pandemic). With its rock-solid commercial dynamics Jiangsu continues to comfortably occupy the #1 slot in our corporate growth ranking.

Vertex Pharmaceuticals Incorporated is in #4 slot in R&D productivity, still largely driven by marketed blockbuster Trikafta (that has more than doubled in value compared to last year’s ranking and makes up 97% of Vertex’s overall portfolio value). The big weakness of Vertex has been its pipeline, reflected in last year’s #21 position in the momentum ranking. Since then, one deal the company has made with CRISPR Therapeutics AG on CTX001 turned out to be a winner. This ex vivo gene editing product for sickle cell disease and beta thalassemia has projected 2026 sales of >$1.3bn and has been sufficiently valuable to propel Vertex into the #10 slot in this year’s momentum ranking. Still, the challenge remains for Vertex to diversify beyond the cystic fibrosis (CF) franchise, however Vertex has time on their side as Trikafta’s loss of exclusivity is not expected before 2037. In line with the commercial strength of its CF franchise, Vertex is in the #2 slot of corporate growth performance. Perhaps the sole reason why Vertex has not yet been taken over by big pharma is its market cap of >$60bn.

Eli Lilly and Company also makes a repeat showing as a top 5 company in slot #5. Lilly boasts both a strong pipeline and a high performance of products launched in the last 5 years. As a consequence of its continuous strong performance, Lilly is in the #3 slot in the corporate growth ranking. Lilly’s strongest area is endocrine (mostly diabetes / GLP-1) that makes up 44% of total value, followed by oncology (24%) and CNS (19%). The biggest pipeline product is Alzheimer’s beta-amyloid antibody donanemab. However, all will depend on the expected 2022 data readout from the ongoing Phase III study that has a head-to-head design versus controversial Biogen drug Aduhelm (aducanumab). There are still challenges to overcome as the CMS recently announced a very narrow reimbursement of Aduhelm only in the context of “evidence generation,” i.e. clinical trials which include just a tiny fraction of all early Alzheimer’s patients. However, CMS remains open to broader coverage of future antibodies when sufficient and clear therapeutic benefit is demonstrated. Assuming that donanemab can clear both approval and reimbursement hurdles with truly convincing data, analysts expect peak sales of $4.8bn by 2026.

Novo Nordisk And AstraZeneca Losing Steam?

Novo Nordisk A/S has been the most consistent top 5 company in our ranking over the years, though this year only made it to slot #8. While the value of marketed GLP-1 products is still substantial, the pipeline highlights Novo’s struggle to diversify away from its endocrinology / diabetes focus (93% of total value). Novo’s momentum rank remains at #24, reflecting a comparatively weak pipeline. While Novo has started to do mid-size M&A deals regularly (RNAi platform company Dicerna was added in 2021 for $3.3bn), these efforts have not yet translated into a visible difference to its advanced pipeline value. Like Vertex, Novo has the luxury of time, as loss of exclusivity of key GLP-1 assets is not before 2031, allowing it to follow a chain-of-pearls / licensing strategy instead of being forced into major M&As. Novo’s strong commercial performance has led to a rank of #4 in the corporate growth ranking.

AstraZeneca PLC has had an incredibly strong showing over the last years, however its pipeline value has not really kept up (#23 momentum ranking). Like Novo, AstraZeneca corporate growth performance is still strong (#5) and loss of exclusivity of key growth products is not expected before 2032-2035, giving plenty of time to build a pipeline based on internal R&D and deals.

Biogen and Eisai – Is There Life Post-Aduhelm?

While Aduhelm is still the most valuable product in Biogen, Inc.’s portfolio there are significant uncertainties as to its real commercial potential in the absence of additional confirmatory clinical data and the recent CMS reimbursement decision. Nevertheless, in 2021
Biogen has remained in the top 10 (#7 overall, #4 in pipeline momentum). In addition, Biogen’s corporate growth ranking reflects the comparably good commercial performance (#8). Given the decrease in market cap of >50% versus its 2021 peak one can speculate that Biogen is in takeover territory, but perhaps this will only happen once the key uncertainties around Aduhelm are resolved.

Interestingly Biogen’s partner on Aduhelm, Eisai Co., Ltd. shares a similar fate with the difference that its performance is even more dependent on the fate of Aduhelm (ranked #6 overall). But Eisai’s corporate growth performance does not qualify the company for a top 10 position (it is #18), perhaps not a surprise given that Japanese pharma tend to be much less profitable than their US counterparts.

Roche – The Best Performing Mega Pharma

Roche Holding AG is again in the top 10 (#9), due to a fairly strong showing of anti-PD1 Tecentriq, anti-CD20 Ocrevus for MS and bispecific anti FIX & X for hemophilia Hemlibra. Roche’s most valuable pipeline product is beta-amyloid antibody gantenerumab for Alzheimer’s, followed by immune-oncology TIGIT antibody tiragolumab. The latter failed to add anything to Tecentriq plus chemo in frontline small cell lung cancer (SCLC) recently. However, the final verdict is still out as there are studies running in multiple
cancers including non-SCLC, where tiragolumab showed impressive Phase II results in a Tecentriq combo. Roche’s overall value is dominated by oncology (52%) followed by CNS (20%). The corporate growth position is rather modest (#17), but overall the company seems to be in a good shape, and its diagnostics division has enjoyed lots of tailwind during the COVID pandemic – due to the high demand for PCR and antigen-tests.

First Ever Small- To Mid-Size Pharma Ranking

For the first time since the inception of our ranking in 2016 we have also reviewed the R&D productivity and corporate growth of small- to mid-size companies that are in positions 31-50 by total sales. Like the big to mid-sized ranking, the winner is a COVID vaccine company, namely Novavax.

Novavax, Inc. has developed a traditional vaccine based on the spike protein co-formulated with an adjuvant. Analysts have speculated that many people who refused to get vaccinated due to concerns about the safety of the mRNA technology would prefer a traditional antigen-based vaccine, thus the peak sales are expected to be >$8bn. Launched in most major markets, COVID vaccine sales are anticipated to grow fast, placing Novavax in the #1 slot of the corporate growth ranking. Multiple other vaccines are in Novavax’s pipeline (influenza, RSV, Ebola, MERS, SARS) but none are expected to come close to the COVID vaccine in terms of sales potential. However, as the COVID vaccine loss of exclusivity is not expected before 2040, Novavax has sufficient time to diversify its portfolio.

Unlike Novavax, whose portfolio values is dominated by a single blockbuster, the #2 ranking company Swedish Orphan Biovitrum AB (SOBI) has multiple moderate- to high-valued assets that focus on the rare disease space (the exception is Kineret for rheumatoid arthritis). The largest product in value, Factor VIII-replacement Eloctate, is responsible for only 18% of SOBI’s portfolio value. SOBI has built its portfolio mostly through deals – several of them in the area of rare blood disorders like hemophilia (blood is making up 51% of total value). SOBI is also strong commercially, reflected in the #6 corporate growth rank. The company was also in the middle of a takeover battle in 2021 that was repelled by 8% shareholder AstraZeneca because it was reportedly afraid that SOBI’s respiratory syncytial virus targeting mAb Synagis, whose US rights it licensed to SOBI back in 2018, could end up with a competitor.

Rounding out the top 5 are ADC platform pioneer Seagen Inc. (#3), oncology-focused Exelixis (#4) and rare disease pioneer BioMarin Pharmaceutical Inc. (#5). Seagen’s top product Adcetris is too old to still feature in our analysis, but both Padcev and Tukysa are newer high value products with projected 2026 sales of $2.3bn and $1.3bn, respectively. Padcev is a Nectin-4 auristatin mAb conjugate, whereas Tukysa is a small molecule Her-2 kinase inhibitor originally discovered at Array Pharma, licensed to Cascadian Therapeutics, which was acquired by Seagen for $614m in 2018. The latter is an example of Seagen positioning itself not primarily as an ADC platform company anymore but rather as a global biotech that wants to revolutionize cancer care. In line with this, Seagen now also focuses on ADCC-enhanced antibodies.

Exelixis’ (#4 in corporate growth) portfolio value is dominated by its renal cancer drug Cabometyx (2026 forecast sales of $3.4bn). The key challenge for Exelixis will be to prepare for the looming Cabometyx patent cliff (2027), to cope it has started to build a broad early portfolio, its most advanced assets in Phase I are a multikinase inhibitor, an oral CDK7 inhibitor and a tissue factor targeting antibody drug conjugate (ADC). Whether any one of these is sufficient to replace the $3bn of Cabometyx remains to be seen. Perhaps Exelixis will be taken out by large pharma before they can prove their worth.

BioMarin is a pioneer in the rare disease field with a diversified portfolio covering multiple modalities. Like most companies BioMarin has used a strategy of organic discovery, licensing and M&A to build its portfolio. The highest value product relevant for our ranking is the AAV-Factor VIII gene therapy for hemophilia (2026 sales of >$600m). Because AAV does not integrate into DNA, the key question here is the sustainability of expression levels, one of the reasons why the FDA required more data in 2020. Two-year data are now available, but whether they are sufficient to convince the FDA is still a question. Another overhang coming from a different drug is a preclinical tox cancer signal in immune-compromised rodents seen with its PAH AAV product to treat PKU, which is now on a clinical hold. This could also have negative ramifications for the hemophilia AAV gene therapy. Even though BioMarin has been on the top list of takeover candidates for a while, it is unlikely that large pharma will move in before some of the questions around BioMarin’s gene therapy products are resolved.

Focused Diversification – Growth Strategies Of SMEs

The key strategic question for the small- to mid-size players is how they can grow beyond that first big success that put them on the map – or put differently, how can they successfully diversify without diluting their strengths? Seven out of the top 10 companies have a diversified portfolio, whereas Exelixis, Novavax and OPKO Health have a high value concentration on a single asset only and thus high risk of either a large patent cliff or competitive disruption. As risk and return are correlated, a more risky, high focus typically also means more potential upside compared to diversified players. Investors typically do not mind as they can diversify their shareholdings easily, unlike a management team that needs to be careful not to move away too far from the company’s core competencies. One of the easiest ways to scale-up quickly beyond the first product is via a competitive platform technology that can generate multiple products, such as Seagen’s industry-leading ADC platform that has generated multiple NPV-drivers with different targets. After reaching a critical size, Seagen decided to further expand to ADCC-enhanced antibodies that share the basic antibody technology with ADCs and continue its primary focus on cancer. Another focused diversification strategy has been pursued by BioMarin with its closely related enzyme replacement therapies for MPS I, MPS IVA and MPS VI. In addition, BioMarin has made a recent push into AAV gene therapies continuing its focus on rare diseases. 

Alternatively, M&As are frequent means of diversifying and tapping into new expertise quickly. Horizon Therapeutics (ranked #6 in the small- to mid-size productivity ranking), for instance, has a strategy primarily built around M&A in the autoimmune and inflammatory space. In addition to productivity and R&D diversification, M&A can support corporate growth in allowing companies to access new markets. One example is SOBI’s acquisition of Dova Pharma in 2019 to, amongst other goals, expand SOBI’s presence in the US. Another is Japanese Kyowa Kirin Co., Ltd.’s (rank #10 in the small- to mid-size productivity ranking) acquisition of Archimedes in 2014 to expand its presence in Europe.

A key element that is often overlooked, however, is the importance of people, culture and operating model during phases of hyper-growth. Some of the top-ranked companies are expected to more than double in size over the next few years. Companies that grow too quickly risk losing the creative spark that made them successful in the first place unless they have a very strong leadership and culture that can enable both creativity and process orientation. But even a successful transition to the next level of scale is no guarantee for smooth sailing, as the fates of once outperformers like Gilead Sciences, Inc. or Regeneron Pharmaceuticals, Inc. illustrate. Both companies were at the top of the ranking at one point and due to weak pipelines and aging portfolios have dropped considerably in the last few years.

An interesting question to observe over the coming years will be the fate of now outperforming BioNTech and Moderna. Will they be able to use their profits to successfully build the businesses they set out to and fully realize the promise of mRNA beyond infectious disease vaccination?

Methodology

Company Inclusion Criteria

In the top 30 ranking, the world’s largest top 30 public pharmaceutical companies, as judged by total pharmaceutical sales, were included. A separate ranking of small- to mid-sized biotech and pharmaceutical companies included the top 31 to 50 ranking companies, as judged by pharmaceutical sales. Generics companies were excluded from the ranking.

R&D Productivity Ranking

To evaluate the R&D productivity, the Catenion methodology takes an approach that focuses on value versus investment. We compared companies’ total R&D spending from 2012-2021, including costs from M&A (see below) and a 7% cost of capital, with the total net present value (eNPV) today of compounds marketed in the last five years and all pipeline products.

Using this data, two distinct rankings were calculated – a ‘momentum’ and a ‘long-term’ ranking. The momentum ranking aims to capture the forecasted value of a company generated by taking the current eNPV of its entire pipeline and dividing it by the firms R&D and M&A costs, both adjusted for cost of capital, as described above. By contrast, the long-term ranking focuses on the value already generated by a company in the recent past, specifically the eNPV of products marketed in the last five years are added to the pipeline eNPV whilst those marketed six to eight years ago are also added but with the contribution tailing off by 33% per year. This is then divided by the total costs as per the momentum rank. The overall R&D productivity rank was then generated by weighting the momentum rank ¼ vs. ¾ for the long-term rank.

Incorporating The Costs Of M&A

To fairly allocate M&A costs to the R&D costs, each deal was defined by its primary driver. If the acquired firm had pharma sales >$1bn it was classified to be commercial and thus 25% of the total deal value was added to the R&D costs for that deal year. By contrast a deal involving a firm with no marketed products is, by definition, a pipeline driven deal, thus 80% of the deal costs were taken into account. In addition, if the total cumulative sales of the target company up until the deal date were <20% of the deal value then these were also considered to be a pipeline driven deal (e.g. AbbVie’s acquisition of Pharmacyclics). Finally, if a firm had pharma sales <1bn$ it is considered a hybrid of the two deals and 50% of the M&A costs were considered.

Corporate Growth Ranking

To evaluate the corporate performance of each firm, the historical and forecasted CAGR for pharmaceutical sales, EBITDA and market cap (historical only) was calculated. Each company was ranked independently on each of the five metrics before they were combined with equal weighting to generate the overall corporate growth ranking.