2019 Multinational Pharmaceutical Companies "Report Card": Innovative Drugs Pulling Obvious, In China'S Performance Pressure Change

As of February 25th, almost all global pharmaceutical companies announced their 2019 earnings report. Although only a few increase to two digits, the pharmaceutical sectors of these enterprises achieved excellent results in 2019.

Despite the business of instruments and diagnostics, the top three sales in 2019 were Pfizer, Roche and Novartis. Despite the poor performance of the generic brand and generics department, Pfizer, the first largest pharmaceutical company in the world, is still the number one company in 2019. It is the only company with a revenue of over $50 billion in pharmaceutical sales in the year of 2019. Compared with the first half of the year, the growth of two digit companies is the same as Roche, Mercedes, BMS and Alice.

However, the performance of pharmaceutical stocks in the world's major capital markets in 2019 was dazzling. Most large cap stocks showed healthy two digit growth: NASDAQ biotechnology rose 24%, standard & Poor's pharmaceutical +12%, Dow Jones pharmaceuticals and biotechnology +14%, Thomson Reuters Europe health care +26%, Topix pharmaceutical index (Japan) +21%.

In the M & a transaction, due to the early years of Shi Guibao and BMS, and AI Zhong Wei at the price of 74 billion and 63 billion US dollars respectively, the acquisition of Celgene and Allergan was acquired, and Takeda completed the acquisition of the shire, which made 2019 a new year for M & A in recent years. According to EvaluatePharma data, 2019 of global pharmaceutical companies spent $217 billion on mergers and acquisitions, slightly below the 2014 record level.

The general trend of the world is long and well matched. It also applies to the development of the pharmaceutical industry. Pfizer, Mercedes, GSK, Novartis and other major companies have announced the separation of their business or acquisition, merger of new companies, innovative drugs and mature drugs business boundaries more and more obvious. The pursuit of innovation pipelines is closely related to the fate of small and medium-sized biopharmaceutical companies.

As a big country with a population of 1 billion 400 million, the performance of the Chinese market is getting more and more eye-catching in the earnings of these big companies. First, the share and growth rate of China's market remained at a high level. Two, in the world's second largest drug market in China, multinational pharmaceutical companies are enjoying more and more policy regulation and superposition while enjoying innovative drugs to speed up the listing dividends. In the post 4+7 era, more than 80% of the patent period has been over the patent period. The original research drug has ushered in a real "special profit cliff". "Regulation of the hands", so that multinational pharmaceutical companies in addition to products, but also to pay attention to and timely adjustment of future market strategy.

Innovative medicine engine

In 2019, Pfizer's revenue fell by 1% to $51 billion 800 million compared with the previous year, which was dragged down by non patent brands, generic drugs and consumer health services. But its core biopharmaceutical business revenue increased by 8%, mainly driven by Ibrance, Eliquis, Xeljanz and Vyndaqel, and the operating income of emerging markets increased by 14%. 39 billion 400 million. General and strong business revenues of non patent brands and generic drugs business declined by 16%, revenues of $10 billion 200 million, and general China's growth of 7%.

Albert, chairman and chief executive of Pfizer (Albert) Bourla) took a bold and clear reform of the business line after taking office. "2019 is a busy year. Highlights include: robust financial performance, asset allocation for shareholders, our growing R & D product line, and joint venture between Pfizer health medicine (PCH) and GSK. We also announced the final agreement on the merger of puqiang and Mai LAN to create a new global pharmaceutical company, Viatris. " After cutting down "puqiang" and "selling" health business, "new Pfizer will be a small, science based company, focusing on innovation."

Roche's sales in 2019 reached 48 billion 500 million Swiss francs (about US $49 billion 500 million), an increase of 11% over the same period last year. Innovative drugs Ocrevus, Hemlibra, Tecentriq and Perjeta are the main driving force to jointly contribute 4 billion 400 million Swiss francs to new sales. Roche said it was enough to offset the impact of biosimilar drugs. The three carriages bevacizumab, rituximab and trastuzumab continued to contribute a steady income to Roche, with revenues of 70.73, 64.77 and 6 billion 39 million Swiss francs in 2019. However, in recent years, due to the frequent impact of biosimilar drugs in various markets, only a slight increase in bevacizumab revenue was achieved in 2019 (+3.3%). In the Chinese market, sales increased by 36% to 3 billion 100 million Swiss francs due to deeper and wider penetration.

Another Swiss giant, Novartis, completed the Alcon division of ophthalmic business in 2019. It also relied on innovative pharmaceutical business to boost growth. In 2019, the growth of innovative drugs business increased by 12% to $37 billion 700 million, mainly by psoriasis drugs Cosentyx 3 billion 600 million US dollars (+28%), heart failure drugs Entresto 1 billion 700 million US dollars (+71%) and "sky price medicine" Zolgensma (361 million US dollars); Promacta / With the promotion of Revolade, the cancer department grew by 10%. The core profit margin of innovative drugs increased by 1.8 percentage points, accounting for 33.5% of sales. The Sandoz business of the generic drug business declined by 1% to $9 billion 700 million.

Benefiting from the acceleration of the approval of China's innovative drugs, Novartis gained 25 new drug / indications approval in 2015-2019, and 22 new drugs entered the national health insurance directory. Sales in the Chinese market increased by two digits in 2019, and Novartis expects to double its business in China by 2024.

Holding the most popular "K medicine" Keytruda in recent two years, merseu Dongying has been catching up with the top three. In 2019, the annual sales volume of Mercedes was 46 billion 800 million US dollars, an increase of 11%, of which PD-1 drug Keytruda sales increased 55% to 11 billion 100 million US dollars, and the global sales volume of vaccines increased by 15% to 8 billion 400 million US dollars. At the same time, Mercedes announced that it would split women's health, traditional brands and biosimilars into independent new companies.

As a successor to "drug king", Keytruda took the new indication of multinational regulatory agencies in 2019. For example, Japan has approved three new first-line indications for advanced renal cell carcinoma (RCC). In China, first-line treatment has been approved for the treatment of metastatic squamous non-small cell lung cancer (NSCLC) combined with chemotherapy, and two new Keytruda schemes have been approved in Europe.

Miller (Humira) is still the global champion in 2019. Albeit earned $33 billion 266 million in revenue, an increase of 1.6% over the same period last year, and net income of $33 billion 266 million per year. It grew by 1.6% on the basis of the generally accepted accounting principles. Despite frequent shocks from similar biotech products from various markets, Miller still sold 19 billion 169 million dollars, down 3.9%, and the US market contributed 14 billion 864 million dollars (+8.6%), and the international market slumped by 31.1%. In addition, Ai Bowei (AbbVie) acquisition of Allergan transaction is expected to be completed in the first quarter of 2020.

EvaluatePharma predicts that by the year 2024, Keytruda will leave Humira behind the top of the global prescription drug market, and its annual sales will exceed 17 billion dollars.

Another competitor of the K drug, O drug, comes from BMS. In 2019, Bristol Myers Squibb's revenue increased 16% to $26 billion 145 million, but the best seller was not Opdivo. The first place in BMS revenue is Eliquis, 7 billion 929 million US dollars (+23%), second is O medicine 7 billion 204 million US dollars (+7%), another immunization drug Yervoy revenue is 1 billion 489 million US dollars (12%).

Overall, the biggest gains in the stock market came from the top three European teams: AstraZeneca (31%), Roche (29%) and Novartis (27%), because they also held heavy innovative pharmaceutical products, such as Tagrisso and Lynparza, Ocrevus and Hemlibra, and Zolgensma.

In addition to large pharmaceutical companies, some small and medium enterprises are emerging from the international perspective, such as the 12 best months of Jiangsu Heng Rui pharmaceutical, Japan and China Pharmaceutical and CSL.

Policy overlay effect

As the second largest drug market in the world, the impact of China's official policy on the decision making of transnational pharmaceutical companies has become more and more important in the past two years.

In 2019, the Chinese medicine market not only welcomed second rounds of procurement, but also had a new round of negotiations on the national health insurance drug negotiations, and the relevant drug market is coming to a new pattern in 2020.

On the one hand, the national health insurance agency "soul bargain", on the other hand, foreign pharmaceutical companies frequently show the world's "lowest price" winning the bid. The "medicine king" spent Miller in China for many years, until its biological drugs were listed, and finally entered medical insurance. The four eligible PD-1 drugs were finally accepted by the "domestic" Xin Di Li mAb exclusive bid. The hepatitis C direct antiviral drug (DAA), "innovative competitive negotiation", involved 6 pharmaceutical companies in 4 enterprises. Lide and Mercedes enter health insurance, drug prices fell by an average of more than 85%, the cost of each treatment from the previous 50 thousand yuan to 10 thousand yuan.

The national health insurance negotiations involved 150 negotiating drugs, and 119 new drugs had 70 successful negotiations, including 52 Western medicines and 18 proprietary Chinese medicines, with an average price reduction of 60.7%. The average dosage of three kinds of HCV was over 85%, and the average rate of treatment for cancer and diabetes was about 65%. Of the 31 renewals, 27 were successfully negotiated and the average price fell by 26.4%.

This government and pharmaceutical companies have made great efforts. "For multinational companies, the prerequisite for successful negotiation is to get a base price approved by the headquarters, otherwise good negotiation skills will be useless. We did all kinds of considerations, plans, anticipation, analysis of various situations, and got recognition from headquarters. Luo Yongqing, general manager of Gilead scientific global and general manager of China, told the economic report in twenty-first Century, "such recognition is not easy. China's negotiating price is lower than the price of overseas or even surrounding markets. How can we persuade our headquarters?" First of all, the headquarters must have a corresponding concept, and then look at the number of patients in China, and how much volume will increase in the next 35 years, so that the volume of sales will not be much worse than expected.

Another "hard hearted" substantial price reduction Senofi also mentioned in the earnings report the effect of quantity purchase and negotiation on performance. As a result of the second round of nationwide volume purchase, Amaryl sales in China will drop sharply in 2020, and also affect the Asian market revenue in the fourth quarter of 2019. In 2019, Sanofi grew by only 6.4% in China and emerging markets. In 2019, the company's revenue was 1 billion 334 million euros, down 8.8%, but it was down by 36.9% in the fourth quarter of 2019, due to the purchase of quantity purchase. Senofi said that in 2020, the revenue of China's market will continue to decline by 50%.

In the past two years, AstraZeneca, the most impressive market in China, has gained $4 billion 880 million in China's market in 2019, an increase of 29% over the same period last year. AstraZeneca discussed the impact of the recent coronavirus on its business in the earnings report. "All the guidelines assume that China's adverse effects will last for several months."

As the largest area in AstraZeneca, sales in emerging markets accounted for 35% of total sales, an increase of 18% in the year, reaching 8 billion 165 million US dollars, and China's sales volume of 4 billion 880 million dollars, and sales outside mainland China increased 6% to 3 billion 285 million US dollars. Although Da Glenn has been "bargain" in the medical insurance negotiations, but AstraZeneca still has Tagrisso, "I drug" Imfinzi approved the listing and other innovative drugs to pull the performance. In emerging markets, Tagrisso sales increased 120% in the year 2019 to $762 million, thanks to the entry into the national health insurance directory in China.

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