Roche AG (RHHBY) moved up to the top spot in the 2020 Pharmaceutical Innovation Index, and for the second year in a row Astra Zeneca (AZN, Financial) was ranked number one in in the Pharmaceutical Invention Index, according to IDEA Pharma, a New York City-based pharmaceutical consulting firm.
The Innovation Index measures, scores and recognizes a company's ability to deliver innovation to patients by objectively evaluating performance based on the rolling five-year period from 2014-2019. It attempts to answer one question: if you gave the same molecule to two different companies in its early phase, which would make the best of it?
Meanwhile, the Invention Index ranks the industry's best pipelines, evaluating novelty and meaningful development across first-in-class development, breakthrough medicines and more. Innovation is defined as "return on invention."
Are these rankings valuable to investors? It seems the Innovation Index rewards those pharma companies for what they’ve already achieved, while the Invention Index seems closer to a predictor of future benefits. The indexes are another interesting data point, but they are far from a Holy Grail of investing.
IDEA's CEO Mike Rea said there is no “gaming” the Innovation Index, and that “…success is achieved by discovering and developing meaningfully great medicines and getting those medicines to market and to patients."
Pharmaceutical Innovation Index 2020
| Company Name | 2020 Pharmaceutical Innovation Index | Change from 2019 |
| Roche | 1 | +7 |
| AbbVie (ABBV, Financial) | 2 | 0 |
| Novartis (NVS, Financial) | 3 | +6 |
| Vertex Pharmaceuticals (VRTX, Financial) | 3 | New |
| Eli Lilly (LLY, Financial) | 5 | -2 |
| AstraZeneca (AZN, Financial) | 6 | +6 |
| Alexion Pharmaceuticals (ALXN, Financial) | 7 | New |
| Merck & Co (MRK, Financial) | 8 | -3 |
| Shionogi & Co (TSE:4507) | 9 | New |
| Johnson & Johnson (JNJ) | 10 | +1 |
| Regeneron Pharmaceuticals (REGN, Financial) | 10 | +7 |
Source: IDEA Pharma
Pharmaceutical Invention Index 2020
| Companies |
2020 Pharmaceutical Invention Index | Change from 2019 |
| AstraZeneca | 1 | 0 |
| Bristol-Myers Squibb (BMY) | 2 | +4 |
| Eli Lilly | 3 | 0 |
| Novartis | 4 | 0 |
| Gilead Sciences (GILD) | 5 | +6 |
| Regeneron Pharmaceuticals | 6 | +1 |
| AbbVie | 7 | -2 |
| Merck & Co | 7 | +8 |
| Vertex Pharmaceuticals | 9 | -4 |
| Roche | 10 | +2 |
Source: IDEA Pharma
Among companies on the Innovation Index, Regeneron Pharmaceuticals (REGN) showed the greatest appreciation in the value of its shares over the past year at 53%, followed closely by Vertex Pharmaceuticals (VRTX) at 50%. Eli Lilly and Co.’s. (LLY) shares jumped 31%, Bristol-Myers Squibb (BMY) 30%, Astra Zeneca (AZN) 24% and Roche 23%. The only decliners were Alexion Pharmaceuticals (ALXN), whose investors saw the value of their holdings sink by 50%, and the Japanese company Shionogi & Co. (SGIOY), which was down 13%. The Dow Jones U.S. Pharmaceutical Index was up 6% in the past year.
Roche headed the innovation group primarily due to several milestones achieved by its cancer drug Tecentriq, which became the first treatment of its type to get approved by the U.S. Food and Drug Administration to treat triple-negative breast cancer and the first to enter previously untreated extensive-stage small cell lung cancer, according to an article in FierceBiotech. A combo of Tecentriq and Roche’s own Avastin also lengthened lives of new liver cancer patients compared with Bayer’s (WBO:BAYN) standard-of-care Nexavar, making it the first time in a decade that a treatment has improved survival in this population.
Astra Zeneca earned top honors in invention primarily due to two drugs: the Lupus medication anifrolumab, which performed well in a phase 3 trial, and triplet Breztri Aerosphere, which treats severe chronic obstructive pulmonary disease (COPD).
Disclosure: The author holds positions in Bristol-Myers Squibb, Eli Lilly, Gilead, and Johnson & Johnson
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