The best companies in drug research

A new ranking of the top 22 firms by R&D productivity created by Sector & Sovereign Health and its lead analyst, Richard Evans, a former Roche executive and longtime Wall Street analyst. 

Drug Companies Ranked By R&D Performance
Rank		Company	Economic Returns to R&D Spending*	Patents / $1M R&D spend*	Average Relative Quality of Innovation*	Average Rank (by share of innovation) in Target Research Areas	Internal Bias Index
1		Bristol-Myers Squibb	1.5%	0.22	1.2	1.9	23
2		Celgene	32.3%	0.23	1.5	8.4	98
3		Vertex	-125.4%	0.81	2.4	4.2	53
4		Gilead	20.8%	0.16	1.1	6.4	185
5		Allergan	8.0%	0.46	1.4	8.1	96
5		Roche	7.7%	0.09	0.9	2.0	24
7		Amgen	9.4%	0.09	1.1	5.3	58
8		Johnson & Johnson	8.2%	0.07	1.0	4.8	34
9		Novo Nordisk	17.5%	0.11	1.7	10.8	439
9		AbbVie	11.1%	0.12	1.0	9.4	54
9		Pfizer	-3.2%	0.11	0.9	2.5	24
12		AstraZeneca	3.9%	0.10	1.0	7.1	43
12		Biogen Idec	9.1%	0.13	1.1	13.1	155
12		Shire	18.6%	0.11	1.4	15.4	338
15		Sanofi	1.5%	0.09	0.9	4.2	28
16		Merck	3.0%	0.08	0.9	5.4	35
17		GlaxoSmithKline	1.0%	0.09	1.0	6.0	36
18		Novartis	8.4%	0.05	0.7	5.3	37
19		Regeneron	8.3%	0.16	0.7	13.7	638
20		Bayer	-2.1%	0.07	0.9	10.3	82
21		Eli Lilly	4.5%	0.05	0.8	11.7	131
22		Alexion	12.8%	0.03	0.4	21.4	8,012
		Sources: Bloomberg; AcclaimIP; SSR Health Hidden Pipeline Analysis and assumptions. *Rolling 5-year average.

The goal of the report, available for purchase at HiddenPipeline.com, is to start to provide metrics that companies can use to measure how well they are doing when it comes to inventing new drugs — and to get better. Too often, Evans says, pharmaceutical executives instead use the industry’s low success rates as an argument that success is right around the corner. “A gambler that has lost everything he owned, just because he now has a strong hand doesn't make him a good gambler,” Evans says.

“This is a very rigorous report,” says Elliott Sigal, the former head of research and development at Bristol-Myers Squibb, the top-ranked company. “Nobody would argue: the general trend is that by many measures R&D productivity of the group is going down. Those of us trying to compete and do well in this space see a lot of value for being in the upper quartile. You used to do well if you were in the average.”

The business of inventing, testing, and marketing new medicines is in a protracted crisis. The number of new drugs invented per billion dollars of research money spent has been halved every nine years going back decades, like a perverse reversal of the exponential improvement of microchips that keeps Silicon Valley constantly hopped up on its own grandeur.