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Where the Drugs Are: The Best and Worst Pharma R&D Pipelines

Whose drug pipeline is the mightiest of them all? Depends on how you slice the data.

Novartis (NVS) has the biggest R&D pipeline of new drugs, at least in terms of total estimated future revenues, according to an investors' note from Bernstein Research's Tim Anderson that analyzes nine large pharmaceutical companies. Eli Lilly (LLY) has the worst. Looked at another way, though, Bristol-Myers Squibb (BMY) comes out ahead. More on that in a moment.

Anderson's note does something few people bother to do by comparing all the products currently being developed by major drug companies and estimating their potential revenues by 2015. Such estimates are notoriously unreliable, of course, but it's still interesting to see all the pipelines compared on a single sheet of paper. Here's the ranking:

Total estimated extra revenues from pipeline by 2015

  • Novartis: $4.5 billion
  • Pfizer: $3.8 billion
  • GSK: $3.6 billion
  • Merck: $3.3 billion
  • BMS: $3.2 billion
  • Roche: $2.2 billion
  • AstraZeneca: $1.6 billion
  • Sanofi: $1.2 billion*
  • Lilly: $1 billion
*Doesn't include an estimated $770 million for Genzyme's Lemtrada, acquired yesterday.
Anderson says Bristol-Myers Squibb's pipeline is the most valuable because it has the potential to add more revenue to the company in percentage terms than the others. He created this chart to make the companies comparable (click to enlarge):

Note that the law of large numbers is hurting Pfizer (PFE) and Novartis: They're already so big that even though both companies could add $4 billion in revenue it still only moves their respective needles 6 and 7 percent.

The numbers also illustrate why there was never any question that Sanofi-Aventis (SNY) would acquire Genzyme (GENZ): Without the latter's new M.S. drug Lemtrada, which could add $700 million or more in revenue if approved, it comes near or at the bottom of both charts. Other highlights:

  • Eli Lilly and Bristol-Myers Squibb will likely spend the most on R&D through 2015, as a portion of revenues.
  • Pfizer and AstraZeneca will likely spend the least through 2015, roughly half of Lilly and BMS's budgets, percentage-wise.
Related: Image by Flickr user surfglassy, CC.
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