Although the focus of Hardman & Co is predominantly on companies in the smallto mid-sized market capitalisation range, when writing research reports, it is important to position them relative to the industry in which they operate. Apart from Japanese companies, all the major global pharmaceutical companies have reported full-year results for 2018 over the past few weeks; therefore, we have taken the opportunity to update our industry database and generate the first cut of global rankings for 2018. For an industry that requires a long investment cycle – it still takes, on average, 10 years from discovery to launch of a new drug – decisions made many years ago have important consequences on current financial results. Therefore, looking back at operational performance over 20 years reveals how different company strategies have panned out.
Whatever the size of a company, it is imperative to outline the commercial market opportunity that the company’s (often disruptive) technology is targeting. While such work requires significant research, it often constitutes only a very small part of the overall report. It does, however, have the advantage of providing us with a global commercial dataset that is reliable and independent of third-party input.
Pharmaceutical sales are defined as anything that requires a prescription (Rx) and specifically excludes Over-The-Counter (OTC) and consumer products. It is important to note that this does include generic drugs and biosimilars, both of which require a prescription.
Our database of pharmaceutical companies and drugs goes back to 1985. All the data are based on net ex-factory sales reported by companies, and exclude all discounts and allowances, returns, chargebacks and government rebates, such as Medicaid and Medicare. All reported numbers are converted into USD at daily average exchange rates – available from the Bank of England website. These data have, therefore, been compiled consistently and with great care, so that direct comparisons among companies can be made.
We have based our analysis on the annual accounts of ca.40 multinational companies, which cover ca.75% of the global pharmaceutical market and ca.90% of the US drug market. Market share statistics have been calculated from our provisional estimate for the global prescription drug market, which cannot be finalised until after the Japanese drug companies and Boehringer Ingelheim report in May 2019.
Annual reports published by several drug companies over the last two months have cited 5% growth for the global pharmaceutical industry in 2018 (source usually market research organisation IQVIA). This includes a modest currency gain (ca.0.5%) when figures are translated into USD. Based on the reported sales outcomes from most of the top 40 companies in the world, Hardman & Co estimates that the global Rx drug market had underlying growth of 4.3% in 2018, which translates into USD reported growth of 4.8% to $865bn, from $825bn, in 2017. This is consistent with the IQVIA market research estimate, which is for the MAT to September 2018.