In the throes of the COVID-19 pandemic
, when the world was desperate for a lifeline, the global pharma sector’s R&D prowess was thrust into the limelight. Now, as the pandemic begins to loosen its grip, the sector continues to make aggressive investments in research and development (R&D).
At the tip of the spear of this trend is Swiss giant Roche, which boosted its R&D spending to $14.7 billion in 2022, up from $13.3 billion a year earlier. But Roche is not going it alone. Rather than keeping all research in-house, the company has a global R&D matrix involving a network of more than 250 external partner organizations across the world.
Another one of the top pharma R&D spenders in 2022 was Merck & Co., which plowed $13.5 billion into R&D. Unlike many of its competitors, Merck’s strategic playbook includes an animal health unit.
Janssen, Johnson & Johnson’s pharma arm, was next in line, investing $11.6 billion, a slight drop from the previous year’s $11.9 billion. Pfizer, a name now synonymous with the worldwide fight against COVID-19, is now the world’s biggest pharma company in terms of revenue. The company continues to invest heavily in R&D, funneling $11.4 billion into R&D in 2022, paving the way for potential breakthroughs in vaccine and oncology programs.
It’s a strategic move bolstered by a series of recent acquisitions, and CEO Albert Bourla is already looking ahead, anticipating “numerous launches” between 2024 and 2030.
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This bar chart shows the top pharmaceutical companies based on their absolute R&D spending levels in 2022.
Strong R&D investments by Big Pharma players in 2022 across the landscape
Among the top pharma R&D spenders in 2022 in terms of percentage spend on R&D, Roche led the pack, allocating 30.85% of its revenue to research in 2022, a significant increase from 27.1% a year earlier. Not far behind is Belgian multinational UCB, which earmarked 30.27% of its revenue to R&D. It’s a notable milestone, as no top-tier pharma company reached the 30% threshold in 2021.
Meanwhile, established Big Pharma firms such as Merck & Co., AstraZeneca and Novartis maintained relatively consistent R&D spending in 2022. Lilly, however, bucked the trend, boosting its R&D investment from $7 billion in 2021 to $7.19 billion in 2022. That equated to an increase in its R&D spend as a percentage of revenue from 24.8% to 25.19%.
Moderna, which has also become synonymous with the COVID-19 vaccine, is also upping its game, investing $3.3 billion in 2022. This surge in investment signals Moderna’s intent to diversify its business as the demand for its COVID-19 vaccine cools. Facing the challenge of maintaining pandemic-era stock valuations, both Pfizer and Moderna have learned the importance of pipeline diversity and maturity.
Moderna isn’t alone in strategic refocusing. In an effort to sharpen their focus on biopharma, several major drug companies have moved to divest sideline businesses. This trend includes Pfizer’s sale of a chewing-gum division in 2002, and, more recently, it spun off its Upjohn Business, which merged with Mylan to form Viatris. In 2009, Bristol Myers Squibb jettisoned its infant-formula unit, and Eli Lilly separated from its animal health division in 2018.
Last year, GSK spun off its consumer business, which became the standalone company Haleon. Johnson & Johnson is in the process of doing something similar, spinning off its large consumer health division, known for products like Tylenol and Band-Aids, while still retaining its medical device segment and Janssen pharmaceutical branch.
This surge in R&D spending is not just a numbers game. It’s a testament to the industry’s determination to sustain the accelerated R&D momentum it captured during the early days of the pandemic. Overall, R&D spending has grown considerably over the decades. In 2019, the entire pharma sector spent about $83 billion on R&D, which was roughly 10 times the amount spent per year in the 1980s, adjusted for inflation, according to a 2021 Congressional Budget Report.
| Company | Percentage of R&D spend | R&D spending |
|---|---|---|
| Regeneron Pharmaceuticals | 29.51% | $3,592,500,000 |
| Vertex Pharmaceuticals | 28.44% | $2,540,300,000 |
| Boehringer Ingelheim | 27.03% | $5,267,000,000 |
| Eli Lilly | 25.19% | $7,190,800,000 |
| Merck & Co | 22.85% | $13,548,000,000 |
| Janssen | 22.11% | $11,622,000,000 |
| AstraZeneca | 22.01% | $9,762,000,000 |
| Merck KGaA, Darmstadt, Germany | 21.61% | $1,784,459,600 |
| Biogen | 21.93% | $2,231,100,000 |
| Bristol Myers Squibb | 20.60% | $9,509,000,000 |
| Novartis | 19.78% | $9,996,000,000 |
| Daiichi Sankyo | 19.88% | $1,933,106,089 |
| GSK | 18.41% | $6,789,204,800 |
| Bayer (Pharma Division) | 17.64% | $3,578,399,800 |
| Moderna | 17.11% | $3,295,000,000 |
| Gilead Sciences | 18.24% | $4,977,000,000 |
| Amgen | 16.84% | $4,434,000,000 |
| Takeda Pharmaceutical | 15.72% | $4,817,475,272 |
| Otsuka Holdings (pharmaceutical business) | 13.37% | $1,767,084,617 |
| AbbVie | 11.21% | $6,510,000,000 |
| Pfizer | 11.39% | $11,428,000,000 |
| CSL, including CSL Behring | 10.95% | $1,156,000,000 |
Filed Under: Drug Discovery, Drug Discovery and Development, Industry 4.0, Pharma 50, Special Feature
