Santa Claus had no last-minute approvals in his sack, and we ended the year with 27 new drugs (Exhibit 1.). This is a significant drop from the 37 we had last year, and a disappointment to many who had hoped that last year’s surge would be sustained. [Note: this tally excludes 3 imaging agents, but adds back 3 biologicals approved by CBER: Rixubis (nonacog gamma), recombinant factor IX for hemophilia B; NovoEight (turoctocog alfa), recombinant factor VIII for hemophilia A; and FluBlok, recombinant flu vaccine.]

Collectively, Big Pharma bagged 14 registrations (52%), up from 12 last year. This is the first time since 2004 that it has grabbed a majority of approvals. But success was uneven, rewarding only 6 out of 13 companies in that group. GSK and J&J led the pack with 5 and 3 registrations respectively! (Exhibit 2).  If one looks back further at the last 5 years, one can see a fair degree of consistency between the figures for 2012 and for the 2009-2013 period. This suggests that the concentration of approvals on half of Big Pharma may reflect these companies’ capacity to innovate rather than lucky fluctuations.

Ten drugs (37%) targeted novel modes of action, which is slightly down from the last 2 years (46% and 48%). Only 6 drugs (22%) were biologicals, also down from 2012 (30%). Four drugs (15%) received priority reviews vs. 27% the year before.

Across therapeutic areas, oncology dominates with 8 approvals, reflecting the wave of innovation that is benefiting this category. Anti-infectives come in second with 5 approvals, including 4 antivirals. CNS, an area that has struggled with a string of clinical failures, is down to 3 approvals  (Exhibit 3).


Overall, 2013 was good or great for half of big pharma, and forgettable for the rest. Is this the beginning of a split in the group that has long dominated the industry? Some companies may counter that approval statistics is a lagging indicator that reflects past performance and not the promise of their pipelines. If one looks at FDA’s Breakthrough Designations, however, which is a leading indicator of pipeline quality, they tend to show the same picture, and cluster around the companies that have been most successful (Exhibit 2). Success seems to beget success, which suggests that today’s winners may also be tomorrow’s winners.

One thing remains worrisome: 11 new drugs per year — the average big pharma output for the last 5 years — is not enough to support these companies’ $370 billion of current sales, especially since only 3 or 4 will become blockbusters. The giddy promises to deliver 2 drugs per year consistently have not materialized, and there is no indication that they will. Only J&J has achieved this remarkable level of performance over the last 5 years.

If one examines the data for the entire class of 2013, it appears that the traditional distinction between the historic “Big Pharma” and the rest — often called “Small Pharma” for convenience — is getting blurred. Four “Small Pharma” companies — Gilead, Novo, Celgene, and Biogen Idec — with market caps ranging from $66 bn to $115 bn, have actually outgrown the smaller “Big Pharma”. Interestingly, three of them were created in the 1980s, and thrive on R&D budgets that are typically less than half those seen in big pharma.  Are they the future of Big Pharma?

While we may see new members joining the elite Big Pharma club, the relationship between the two groups is actually becoming more symbiotic than competitive. Only 8 of the 27 drugs approved last year were discovered by the companies that registered them. Among Big Pharma, the ratio is 3 out of 14 (21%), and in all cases the innovation that was in-licensed came from a Small Pharma company.

This raises interesting questions about the sourcing of innovation. If much of it is to be found outside corporate walls, one might expect the companies that are best at connecting with the bold thinkers from startups and academia to fare better. This outreach capacity is certainly a strength of J&J’s Innovation Centers  and Janssen Labs, and other companies are experimenting with similar approaches, including Bayer’s CoLaborator, Merck’s Calibr, Pfizer’s CTIs, Sanofi’s Innovation challenges, and GSK’s open innovation labs and Discovery Fast Track Competition.

Pharmaceutical innovation has come a long way since the dog days of six sigma, and the spread of innovation-friendly initiatives across the industry is encouraging. Yet, there remain significant challenges — such as the declining peak sales of new drugs, and extreme prices —  but the success of the companies that led the class of 2013 should be a signal of hope to the rest of the industry. Companies that have worked hardest at transforming themselves are getting results. Let’s hope that more of them will be recognized in 2014.

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