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Measuring Big Pharma’s Chemical Dependency
Wednesday, November 28, 2018

Here at Calcbench, high-quality data is what makes us feel hale and healthy. For everyone else, however, today we’re going to take a quick look at sales of blockbuster drugs in the pharmaceutical industry.

We first identified all listed pharmaceutical and life sciences firms in our database. Then we visited our Segments, Rollforwards, and Breakouts page, to find firms that listed specific product sales that exceeded $1 billion in 2017. (That was our threshold for “blockbuster” drugs.) We wanted to know: to what extent do any large pharmaceutical firms depend heavily on blockbuster drugs for their revenue stream?

First place went to Alexion Pharmaceuticals ($ALXN), with 89 percent of its total $3.55 billion in 2017 revenue attributed to one blockbuster drug: Soliris, an intravenous treatment for autoimmune disorders. Alexion reported $3.14 billion in Soliris revenue last year.

Altogether, however, we found 20 pharmaceutical firms dependent on blockbuster drugs. Table 1, below, shows the top 10 as ranked by dependency.



Dependency on blockbuster drugs is useful to know because that hints at broader corporate strategy. A firm can be relatively small, like Alexion, and still depend heavily on a few blockbuster drugs. A firm can also be huge, like Pfizer or Merck, and depend on many blockbuster drugs.

In either case, the same questions arise: what happens when the patents on those blockbusters expire? What is the company doing now to keep the pipeline of future blockbuster drugs full?

Conversely, a firm like Mylan or Abbott might have large total revenues, but no blockbusters. In that case, the firm probably sells generics. There’s nothing wrong with that per se, but it’s a fundamentally different business model with much lower profit margins. So even though Abbott and Gilead Sciences are nearly the same size in total revenue, they are radically different companies because of blockbuster drugs. Abbott has none, Gilead has lots.

A person wouldn’t necessarily know that unless he or she looked at the revenue details for each company. That’s what Calcbench lets you do.

Users would need to export the Segment data into Excel, and then apply a few rules to get the total blockbuster sales by company. But the exercise itself is not hard (took us less than an hour), and then a financial analyst can have that data-drive, specific insight you might want to put in a client note or put to the CFO on that next earnings call.

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