Novartis, Eli Lilly and AbbVie Top 5-Year New Drug Productivity List

Among members of Big Pharma, Novartis AG (NVS, Financial) brought the most novel medicines to market in the past five years, according to a report from Evaluate Vantage.

The Swiss drug company received the Food and Drug Administration's approval for 12 medications during the period, the most notable being the gene therapy Zolgensma and Kymriah, the first approved Car-T therapy, a type of treatment in which a patient's T cells (a type of immune system cell) are changed in the laboratory so they will attack cancer cells.

At the bottom of the list of 11 is Bristol-Myers Squibb Co. (BMY, Financial) with just three. The number may have been zero if Bristol hadn’t acquired the trio as part of its buyout of Celgene.

What does this mean to investors? In the case of the two companies, there does appear to be some correlation to share price. In the past five years, Novartis shares are up about 30% while Bristol’s stock has increased about 17%. Of course, several other factors come into play, but how well companies do in bringing novel treatments to market says a lot about their research and development proficiency.

Evaluate’s figures denote only those drugs that were owned at the time of approval. Not included are those that were already on the market and acquired as part of a buyout, for instance.

Investors might not care where a drug originated as long as it boosts the companies’ offerings, especially when demand for existing products is declining. It's also important to factor in how well companies expanded the use of their current portfolios, especially in cancer and immunology. Bristol has done just that with its blockbuster treatment Opdivo.

The report included a chart showing the net present value of each company’s marketed drug portfolio, as calculated by Evaluate Omnium from sell-side consensus forecasts, and the contribution from the novel agents.

Roche (RHHBY, Financial), Eli Lilly and Co. (LLY, Financial) and AbbVie Inc.(ABBV, Financial) were all especially prolific, with new drug approvals representing more than a third of each of their marketed product net present values. Big blockbusters were the reason, specifically the cancer drugs Tecentriq and Verzenio, from Roche and Lilly respectively, and Abbvie’s new autoimmune therapies Rinvoq and Skyrizi.

GlaxoSmithKline (GSK, Financial) may not deserve all the criticism aimed at the British company from activist investor Elliott Management, which is pushing for big changes, including the ouster of CEO Emma Walmsley. The company’s percentage of net present value from recent approvals is 33.35%, with a combined value of $125.6 billion.

However, as Evaluate points out, investors have concerns about Glaxo’s ability to make good on its promises because the value of its marketed portfolio is second smallest, ahead only of Eli Lilly. The difference in how investors see their prospects is evident in the difference in market caps. Eli Lilly’s is over $222 billion, while Glaxo’s is less than half that.

Following is a list of how the top 11 pharma companies fared:

Source: Evaluate Vantage