Maven Bio

In the past year, the market values of the 10 largest BioPharma companies rose ~24% to $3.5 trillion while the broader S&P 500 rose even faster, at ~30%. Here is what drove some of the more notable market value increases: It’s no surprise Eli Lilly and Novo Nordisk led the group: Lilly experienced a staggering 62% YoY market cap increase while Novo Nordisk demonstrated a 37% YoY increase, fueled by an expanding set of indications for which their GLP-1s can be useful, along with increasing supply. AbbVie and Amgen both demonstrated a 27% YoY market cap gain from late September 2023 to 2024, driven by different factors. AbbVie's success can be attributed to the performance of its immunology drugs, Skyrizi and Rinvoq, which saw YoY Q2 revenue increases of 43% and 58%, respectively. Earlier this year, AbbVie raised its 2027 forecast for Skyrizi and Rinvoq sales by $6B, now predicting $27B, reflecting strong performance of both drugs. Additionally, AbbVie’s recent acquisition of ImmunoGen and subsequent approval of the acquired ovarian cancer treatment Elahere (mirvetuximab soravtansine) have positioned it for further growth. Elahere, a first-in-class ADC for ovarian cancer, received FDA approval for certain ovarian cancers in March 2024, and recently received a positive opinion from the EMA's CHMP, paving the way for imminent approval in Europe. Notably, Elahere demonstrated a 35% reduction in the risk of cancer progression and a 33% overall survival (OS) benefit compared to investigator-chosen chemotherapy. It is the first treatment to show a statistically significant OS benefit in patients with platinum-resistant ovarian cancer and folate receptor alpha positive tumors. Elahere provides a new option for ovarian cancer patients who previously had very limited choices. Analysts estimate that Elahere may achieve peak sales exceeding $2 billion, underscoring its potential to drive AbbVie's future growth. Amgen's performance was driven by excitement about its weight loss medicine MariTide, its acquisition of Horizon Therapeutics and the strong sales of its bone-building drug Evenity and cholesterol-lowering medication Repatha. Amgen is actively advancing MariTide into a Phase III clinical program and exploring its potential in addressing weight-related conditions such as heart, kidney, and liver diseases. Taking a step back, more favorable valuations will no doubt be a positive catalyst for the broader BioPharma space, giving the large companies that drive deal making more appetite for partnership and M&A deals.

Looking at the profit margins of the 10 largest biopharma companies by market cap reveals some interesting trends: 1. There are many paths to high margins: Roche and Novo Nordisk are at the top, yet have very different portfolio strategies. Roche boasts a diverse product portfolio, including oncology, neurology, infectious diseases, and ophthalmology. Roche is also actively pursuing entry into the cardiometabolic space with a weight-loss pill in clinical development from its acquisition of Carmot Therapeutics. In contrast, Novo has adopted a more focused strategy, concentrating its efforts in the cardiometabolic area, with its GLP-1s driving growth. It’s also noteworthy that the two companies with the highest profit margins, Roche and Novo Nordisk, are both Europe-based. 2. Spinoffs of Non-Core Units Boost Margins In recent years, many pharmaceutical companies have streamlined their operations by spinning off subsidiaries, often those related to consumer health products, as a strategic move to improve focus. One downstream effect is higher margins, as those businesses were often more commoditized. In 2020, Pfizer spun off its generic drug unit, Upjohn, to Mylan to form Viatris. J&J spun off its consumer health division, Kenvue, which allowed the company to concentrate on its core pharmaceutical and medical device businesses. Similarly, Novartis spun off its generics subsidiary, Sandoz, as part of a strategic restructuring effort. That comes after it spun off its eye care business Alcon in 2019.? Finally, Sanofi has announced plans to spin-off its consumer health unit, which is likely to be completed in the coming 12 months. 3. Pfizer’s Post-COVID Restructuring Pfizer is the outlier in terms of operating profit margins, due largely to the effects of the post-Covid slowdown, where vaccine and Paxlovid revenues dropped faster than anticipated, and expenses weren’t managed as planned. While the company has endured a turbulent period, it has taken several steps to right the ship, and things are beginning to pay off. Pfizer has announced plans to cut an additional $1.5 billion in costs by 2027, on top of a previously announced $4 billion cost-cutting plan. This initiative includes restructuring to improve operational efficiencies and product portfolio optimization. In addition to cost cutting, Pfizer is getting a sales boost as it fully integrates products acquired through its blockbuster deal for Seagen, all of which sets it up for a more promising period ahead.

Several biopharma companies raised revenue and earnings guidance when reporting Q2 earnings. Here’s a closer look at the 10 biggest companies by revenue, and what’s behind their results: Pfizer had a good quarter, overcoming challenges related to declining covid-related sales. Pfizer increased full-year 2024 revenue guidance by $1B, largely driven by the successful integration and performance of Seagen, and strong performance of cardiometabolic medicines Eliquis and Vyndaqel. Despite anticipated declines in COVID-related revenues, Pfizer achieved 3% operational growth in Q2 YoY. Covid products Cominarty and Paxlovid are forecast to bring in $8.5B in revenues this year. Excluding Covid products, Pfizer achieved 14% operational revenue growth in Q2. Furthermore, Pfizer’s Manufacturing Optimization Program is expected to save ~$1.5B by 2027, a further reflection of the drive to re-align costs in a post-covid era. Eli Lilly announced a $3 billion increase in its 2024 revenue guidance, projecting between $45.4 billion and $46.6 billion. This is a result of the strong performance of Mounjaro and Zepbound. Lilly's push to increase supply is further demonstrated by its additional $5.3 billion investment in its Lebanon, Indiana manufacturing site, to meet surging demand for tirzepatide. AstraZeneca increased its FY 2024 guidance to a mid-teens percentage growth, fueled by robust sales of promising oncology medicines. The oncology segment experienced robust growth of 19%, propelled by strong global demand and new approvals for Tagrisso in Europe, Japan, and China along with further growth of Enhertu. In the Cardiometabolic space, Farxiga remains a key driver, with sales rising by 32%. Farxiga recently received FDA approval for improving glycemic control in pediatric patients with Type 2 Diabetes. Despite the momentum, Farxiga faces a near-term LOE, with new molecular entity patents beginning to expire in the US in 2025. In closing - one notable characteristic about BioPharma is how close the revenue figures are between the top 10 players. That is in contrast to other sectors like technology, autos, or consumer goods, where the top 5 or even top 3 are significantly larger than the rest.