Key Trends in Offshoring Pharmaceutical R&D:
Company strategies, emerging markets and impact on ROI
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| Overview: | |
| Offshoring and outsourcing have become an increasingly critical contributor to pharma and biotech R&D strategies in recent years. They enable companies to focus on core competencies such as drug discovery or technology development whilst contracting out non-core processes to experts, often at lower costs. As offshore investments begin to mature and provide returns on investment, the opportunity to migrate individual components or whole segments of R&D portfolios will continue to rise. ‘Key Trends in Offshoring Pharmaceutical R&D’ is a new report published by Business Insights that evaluates the offshore R&D strategies that can reduce development times and improve productivity, with analysis of a variety of strategic partnerships, academic collaborations, and outsourcing opportunities. This report identifies emerging areas of technological and scientific significance across the globe and examines the offshore strategies and investments of the top 20 pharma and biotech companies across Asia, Australia, Central and Eastern Europe, Latin America and the Far East. This report also provides a financial and managerial valuation of leading companies based on their P/E ratio, return on assets (ROA) and return on investment (ROI) and measures company performance against the healthcare industry, pharmaceutical and biotechnology sectors and leading shares of the S&P500. | |
| Keywords: Offshoring, R&SD strategies, Emerging economies, Return on investment, ROI, Return on assets, ROA | |
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By Dr Cheryl L Barton / Publication Date: 2nd March 2009
Contents:
Table of Contents
Key trends in offshoring pharmaceutical R&D:
Company strategies, emerging markets and impact on
ROI
Executive summary 10
Offshoring: what, where & why? 10
Company analysis 11
Market analysis 12
Valuation 13
Chapter 1 Trends in offshoring R&D 16
Summary 16
Introduction 17
The evolution of offshoring 17
Trends in offshore locations 19
The decision to offshore 21
Offshoring vs inshoring 23
Emerging R&D trends 25
Conclusions 28
Chapter 2 Leading pharma and biotech
offshore R&D strategies 30
Summary 30
Introduction 31
Leading pharma & biotech company revenues 32
Leading R&D portfolios 34
Global R&D footprint 36
Returns on investment in the emerging economies 38
The impact of economic crisis on pharma’s cash position 40
Johnson & Johnson 42
Revenue 42
Emerging markets 43
Deals 43
Pfizer Inc 45
Acquisitions 45
R&D strategy 46
Deals 48
Roche Holdings Ltd 49
Acquisitions 49
R&D centers 50
R&D strategy 50
Offshore deals 51
Sanofi-Aventis 52
Offshore strategy 52
Offshore R&D facilities 53
Novartis AG 54
R&D strategy 54
Offshore activities 55
Deals 56
Offshore acquisitions 58
GlaxoSmithKline plc 59
R&D strategy 60
Outsourcing 60
Offshore R&D facilities & deals 61
AstraZeneca Plc 62
R&D facilities 62
Offshore deals 64
R&D strategy 64
Merck & Co Inc 66
Restructuring 66
New commercialization model 66
Offshore R&D strategy & deals 67
Eli Lilly & Co. 68
R&D strategy 69
Deals 72
Wyeth 73
R&D strategy 73
Clinical research partnerships 74
Bristol-Myers Squibb Company 75
BioPharma model 76
Strategic acquisitions 77
Amgen Inc 78
JVs and partnerships 79
Schering-Plough 79
R&D investment 80
Deals & acquisitions 80
Abbott Labs 81
Deals 82
Genentech 83
R&D investment 83
Acquisitions 84
Novo Nordisk A/S 85
Venture capital 87
Bayer Schering Pharma AG 87
Biogen Idec 89
R&D evaluation 89
Partnerships and strategic alliances 90
Baxter International 92
Conclusions 94
Chapter 3 Offshoring hotspots and
emerging markets players 98
Summary 98
Introduction 99
Globalization 100
Return on offshore R&D investment 102
Regional offshore investment deals 103
Asia-Pacific 104
China 105
India 106
Japan 107
Singapore 109
Australia 110
Eastern Europe 112
Latin America 113
Brazil 115
Middle East 116
Israel 116
South Africa 118
Conclusions 119
Chapter 4 ROI from offshoring R&D 122
Summary 122
Introduction 123
Key areas for return on investment 123
R&D valuation 128
Financial performance 130
Managerial performance 132
Conclusions 136
Index 138
List of Tables:
List of Tables
Table 1.1: Global technology research parks in secondary & tertiary countries 27
Table 2.2: Top 20 pharma/biotech revenues & R&D investment ($m), 2007 32
Table 2.3: J&J emerging economy sales growth (%), Q308 43
Table 2.4: J&Js recent R&D activities (ex US and top 5 European countries) 45
Table 2.5: Pfizer’s recent R&D activities (outside the leading pharma countries) 48
Table 2.6: Roche’s recent R&D activities (outside the leading pharma countries) 52
Table 2.7: Sanofi Aventis recent R&D activities (outside the leading pharma countries) 53
Table 2.8: Novartis AG recent R&D activities (outside the leading pharma countries) 58
Table 2.9: GlaxoSmithKline recent R&D activities (outside the leading pharma countries) 59
Table 2.10: AstraZeneca recent R&D activities (outside the leading pharma countries) 63
Table 2.11: Merck & Co recent R&D activities (outside the leading pharma countries) 68
Table 2.12: Eli Lilly recent R&D activities (outside the leading pharma countries) 72
Table 2.13: Wyeth’s recent R&D activities (outside the leading pharma countries) 74
Table 2.14: Amgen recent R&D activities (outside the leading pharma countries) 79
Table 2.15: Abbott’s recent R&D activities (outside the leading pharma countries) 82
Table 2.16: Genentech recent R&D activities (outside the leading pharma countries) 84
Table 2.17: Novo Nordisk’s recent R&D activities (outside the leading pharma countries) 86
Table 2.18: Bayer Schering’s recent R&D activities (outside the leading pharma countries) 88
Table 2.19: Biogen Idec recent R&D activities (outside the leading pharma countries) 91
Table 2.20: Baxter’s worldwide facilities, 2008 93
Table 3.21: Top Ten R&D generators, users and importers (US$bn), 2007 100
Table 3.22: Latin American offshore agreements 114
Table 4.23: R&D productivity high and low benchmarks 126
Table 4.24: Valuation ratios by company 129
Table 4.25: Industry investment summary 137
List of Figures
Figure 1.1: Areas for R&D offshoring 18
Figure 1.2: Primary, secondary & tertiary investment 20
Figure 1.3: Key drivers for offshore investment 22
Figure 1.4: Balancing local and offshore investments 24
Figure 1.5: Trends in R&D 25
Figure 2.6: Pharma/biotech R&D intensity (%), 2007 33
Figure 2.7: Leading pharma mid-to-late-stage product pipelines (no. of late stage pipeline
products), 2007 34
Figure 2.8: Leading pharma replacement power, 2007 35
Figure 2.9: Healthcare global R&D footprint 36
Figure 2.10: Accelerated growth in the Emerging Markets, 2006 38
Figure 2.11: Geographic diversification of leading pharma sales, July 2007-Jun 2008 39
Figure 2.12: J&J pharma sales (% share by product), 2007 42
Figure 2.13: J&J deals by type (no. deals), 2007 44
Figure 2.14: Origin of material of drugs by Roche, Genentech & Chugai, 2007 51
Figure 2.15: Novartis Pharma sales, 2007 54
Figure 2.16: Novartis deals, 2007 57
Figure 2.17: Merck’s commercialization model, Dec 2007 67
Figure 2.18: Eli Lilly deals by type (no. deals), 2007 71
Figure 2.19: BMS biopharma model 2008 76
Figure 2.20: Schering-Plough deals by type (no. deals), 2007 81
Figure 2.21: Novo Nordisk’s R&D strategy, 2008 85
Figure 2.22: Biogen’s shareholder value creation plan 90
Figure 2.23: Baxter’s global sales by region, 2007 92
Figure 3.24: Global R&D performance payoff for leading R&D spenders, 2005-2007 103
Figure 3.25: Location of offshore contract R&D (number of deals), 2004-2008 104
Figure 3.26: China offshore activity (% deals), 2004-2008 105
Figure 3.27: India offshore activity (% deals), 2004-2008 106
Figure 3.28: Japan offshore R&D activity (% deals), 2004-2008 107
Figure 3.29: Singapore offshore activity (% deals), 2004-2008 109
Figure 3.30: Australian offshore activity (% deals), 2004-2008 111
Figure 3.31: Eastern Europe offshore activity (% deals),2004-2008 112
Figure 3.32: Brazil offshore activity (% deals), 2004-2008 115
Figure 3.33: Israel offshore activity (% deals), 2004-2008 117
Figure 3.34: South Africa offshore activity (% deals), 2004-2008 118
Figure 4.35: Pharmaceutical R&D expenditure, average R&D expenditure per NAS launch, average
ROI per NAS (1988-2000) 124
Figure 4.36: New strategic and decision making models to target productivity issues 125
Figure 4.37: US pharmaceutical P/E ratios 130
Figure 4.38: US biotechnology P/E ratios 131
Figure 4.39: Leading companies over-performed ROA showed positive 5 year growth 132
Figure 4.40: Leading companies over-performed ROA showed negative 5 year growth 133
Figure 4.41: Leading companies over-performed ROI showed positive 5 year growth 134
Figure 4.42: Leading companies over-performed ROI showed negative 5 year growth 135