The Pharma 1000
The World’s Most Valuable Pharmaceutical Companies: A Torreya Report
November 8, 2021
Torreya report provides a snapshot of the global pharmaceutical industry in November 2021.
Overview of the Report
In 2012, Torreya identified approximately 30,000 pharmaceutical companies. Our team studied these companies and pulled out the active operating companies in ethical pharmaceuticals which had a tangible basis for valuation. We have tracked this group and added to it ever since. We rank the top 1000 companies by value to facilitate a comparison of the economic value of a dynamic and highly diverse group of companies.
Despite the SARS-COV2 pandemic the pharmaceutical industry has grown since our September 2020 report on the largest pharmaceutical companies by value. As of November 5, 2021, we estimate the total value of the industry to be $7.03 trillion (up 5.6%) and total revenue to be $1.44 trillion (up 16.1%).
We have seen big pharma keep its share of the total value pie over the last 14 months while the value share grew for companies based in China or focused on biotech. In contrast, the commercial branded pharma sector shrunk slightly, and the branded generics sector lost almost half of its value share. The drop in branded generics value share reflects ongoing industry commoditization and turbulence in pricing in Europe, Latin America, Africa and parts of Asia.
Companies focused on small molecules have gone from 84.6% market share to 58.2% market share today (most of the generic sector is focused on small molecules). The big growth areas have been nucleic acids and vaccines. New areas like gene therapy, cell therapy, and gene editing have grown very fast but are still small in the total bioeconomy.
The top five countries for the pharma sector globally are the U.S., China, Switzerland, the UK, and Germany.
China lost value share last year due to heavy price cuts impacting its generic sector. The U.S., Germany, Denmark, and UK gained value share. The U.S. experience was driven by Lilly (up $102 billion), Moderna (up $64 billion), AbbVie | Zoetis | Pfizer | Gilead | Viatris (up $136bn as a group). IPO’s (particularly Organon) in the U.S. were associated with $60 billion in additional new value. IPO’s of Chinese biotechs and pharmas were associated with an extraordinary $93 billion in incremental value.
Much of the uptick in the UK can be explained by excellent performance at AstraZeneca (up $46 billion). Denmark did extraordinarily well on both an absolute and share basis. A whopping $102 billion value increment took place in Novo Nordisk shares. Novo went from being ranked #10 to being ranked #4 in the world in a single year.
Much of Japan’s loss in value is explained by weak share price performance at Takeda.
There has been significant change in the geographic structure of biotech in just a year. Despite losing Moderna (to the branded pharma sector), Boston took over the #1 spot in biotech from the Bay Area. Denmark jumped a notch to #4. And, most notably, Jiangsu Province lept three ranks to the #6 spot. Germany has lost its ranking in the top nine, mainly because BioNTech and MorphoSys became commercial-stage companies.
Remarkably, the real story is regions outside of the top nine. Last year (just 14 months ago), the top two regions had 33% value share. Today, it’s 25.7% and the top nine regions had 71% value share. Today, it’s 54%. Smaller regions in the U.S. and China are picking up most of the new value share. The biotech sector is undergoing rapid geographic diversification.
China and the U.S. combined account for nearly 75% of the value of the biotech sector. China has now pulled decisively ahead of European countries with value share of 13%. China has made a deliberate effort to attract home its nationals from Western countries and to encourage them to engage in entrepreneurial activities in the biotechnology industry.
When we looked at the biotech sector by therapeutic area we noted that 39% of all value is associated with novel treatments for oncology. Rare disease and neurology companies account for another 23% of value.
The highest average value per company is associated with platforms, endocrinology, vaccines, virology and renal disease. Valuations in hematology and wound care have plummeted.
We separately studied the “pure generics” sector which we call INN generics or substitutable generics. The INN generics sector is led by Viatris which has completed an important merger with Pfizer’s established products group and is globalizing. Viatris has performed well on a value basis.
Teva follows at #2 and is down in value from revenue a bit from recent years, largely due to challenges in the U.S. market. Sandoz is third with nearly ten billion dollars in revenue. Sun Pharma is #4 in the world with an impressive topline revenue performance of $4.8 billion.
When we added branded generic players to the mix we noted that the #1 player in generics in the world remains Yangtze River Pharma Group (YRPG) with $16bn in revenue, almost all from China.
Last year has seen rapid growth in the biosimilars sector. Celltrion is world’s #1 biosimilars player by value after heavy investment in manufacturing, portfolio and global expansion. Other top players include Sandoz (#2) who are doing well in Europe; Changchun (#3) who are growing well in China, Amgen (#4) who are leveraging one of the world’s best biologic manufacturing bases and Pfizer (#5) who have built a surprisingly strong business.
The animal health area performed quite well last year. Zoetis is by far the largest animal health player and has exhibited rapid growth in both the companion animal and livestock. Boehringer Ingelheim’s business is thriving following its asset swap with Sanofi in 2017. Merck Animal Health has performed nicely during the pandemic and has recently introduced products for the management of pet stress. Elanco rounds out the top four players and has growth enormously by acquisition since its spinout from Eli Lilly.
We looked at the role of private equity in commercial pharma and found that 13% of the world’s largest commercial pharma companies had a private equity / financial sponsor investor.
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