The Pharma 1000
The World’s Most Valuable Pharmaceutical Companies: A Torreya Report
September 23, 2020
Torreya report provides a snapshot of the global pharmaceutical industry in September 2020 and compares it to the industry in 2015.
Overview of the Report
We rank the top 1000 companies by value to facilitate a comparison of the economic value of a highly diverse group of companies.
As we write this report much of the world is watching the pharmaceutical sector with exceptional interest because of its relevance to the COVID-19 pandemic. The stakes are high. The companies mentioned in this report collectively have the ability to restore the economic and social behaviors of the world as we knew them pre-pandemic.
We hope that by reading this report, you will come to better appreciate the pharmaceutical sector’s inventiveness, its globality, its diversity and also its fragility. Policymakers and the populace in many countries have regulated the pharmaceutical sector in ways that have not been conducive to long-term investment in innovation. While at times companies can enjoy great profit, our data show that the norm of the industry is struggle.
You will find that this report is comprehensive and not brief in its review of the included companies, particularly in the 500 top companies that are profiled.
While we apologize for its length, we hope that each of you who takes the time to read this report will come to better appreciate the diversity of the industry, the shared interests held by its members, the range of strategies that are working to create value in different parts of the globe and the ever growing importance of the pharmaceutical sector to society as a whole.
Our key finding is that there has been an increasing democratization of the pharma sector due to rapid growth in the Chinese pharma sector, explosion of the biotechnology sector and major spinouts in the animal health sector.
“Big Pharma” is less important today than it was five years ago. The top eighteen pharmaceutical companies dominated the industry the first time we ranked firms by value (77% value share in 2003). By 2015 big pharma comprised 54% of sector value and today, their value share is under 50%.
The total annual trailing revenue of the Pharma 1000 companies is over $1.2 trillion. And by our estimate, the total value of the global pharmaceutical sector today is $6.65 trillion.
The pharmaceutical industry, in aggregate, is the third most valuable industry in our economy – at least if one looks at the value of public companies worldwide. Only the finance and e-commerce/internet areas are bigger.
The value of the pharma sector is up 20% in the last year, largely due to an influx of capital from investors who decided they were underweight biopharma after seeing the COVID-19 pandemic. Over the last 17 years, the value of the industry has tripled, reflecting exploding demand for medicines amidst a high level of innovation.
There are a number of key trends that emerge from an analysis of the Pharma 1000 over time:
- Rapid emergence of the Chinese pharmaceutical sector. The Chinese government has made conscious efforts in the last decade to modernize its pharmaceutical industry and to promote the use of innovative drugs for its people. As a result, the Chinese pharmaceutical sector has added over $350 billion in value in the last five years and is up roughly 100% in that period. This is the big change in our ranking.
- Biotech in hypergrowth. The biotech sector in the U.S., Europe and especially Asia has seen tremendous value accretion. The biotech sector has gone up in value by over $250 billion in just five years. Today, biotech accounts for 6.3% of the total value of the pharmaceutical sector versus 3% in 2015.
- INN Generic sector down. The INN generic sector has suffered declines in value in the last five years as the result of greater entry and price competition in this market. Since 2015, the top 10 INN generic companies have gone from comprising 6.4% of the global pharma value pie to less than 4% today – approximately a 25 percentage point loss in value on a relative basis.
- Rapid rise of vaccines, nucleic acids and peptides. The last five years has seen an explosion in value of companies that are pursuing vaccines, particularly this year. There has also been strong value growth in companies working on nucleic acids (think Ionis Pharma) or peptides (think PeptiDream, Zealand Pharma).
- Rapid rise of biologics at the expense of small molecules. If one were to go back 50 years, almost the entire pharma sector would have been built around small molecules and natural products. By 2003, roughly 10% of the sector by value came to comprise biologics of various sorts. By 2015 companies focused on biologics accounted for roughly a fifth of sector value. Today, these biologic products account for a third of sector value and small molecules account for less than 60% of the value of the sector.
Please contact Torreya if you have any questions or comments: