The Pharmaceutical Industry At a Glance

The Monitor offers drug industry figures recently compiled by Dr. Robert S. Aries, the French pharmaceutical entrepreneur and industry intelligence-gatherer. The publisher of dozens of monographs and books on the pharmaceutical industry, Aries presented a version of these elements at the Aries International Symposium, "Competition in Multinational Drugs," held in Paris on June 19, 1980. '

The estimates-for the fiscal year ending in June 1980-are noteworthy in several respects. First, they rank the companies according to their pharmaceutical-related, rather than total company, sales. Gathered from company data, as well as other industry sources, most notably the reports of IMS, Inc., the sales estimates include income from raw material sales and royalties on patents and therapeutic products.

The profit margin data represent the companies' before-tax earnings on investment. Aries notes that many companies have sharply reduced their reported profit levels to cut liabilities through a variety of "cash flow and tax avoidance" operations, including the use of tax havens and profit centers.

The comparison of research and development expenses with those for publicity and information demonstrates the significance of advertising in the operations of the industry. Promotional costs generally outweigh R&D expenditures by a factor of two or three; they often equal as much as 20 percent of the sales revenue generated.

Aries estimated promotional expenses through a complex formula taking into account the number of sales people and medical and hospital 'contact personnel, space bought in professional journals, meetings and symposia held to influence purchasing decisions, and media advertising for over-the-counter products.

R & D Aries estimated also on the basis of a multi-variable equation, focusing primarily on the size and composition of the R & D workforce.

Another version, of this chart has appeared in Scrip, a twice-weekly pharmaceutical industry report published in London.

Multinational Country Sales Profit Margin Extimated R&D exp ($mil) Est. Exp. on publicity ($mil) Hoffman-LaRoche (including Sapac managed thru Canada Switzerland 3,100 19 400 300 Merck USA 2,200 28 170 230 Hoechst (not including Roussell) Germany 2,000 18 160 280 Ciba-Geigy Switzerland 1,800 21 150 220 Bayer (not including Miles Lab) Germany 1,600 16 100 200 American Home Products (excluding non-therapeutic packaged products); (including Wyeth & Ayerst) USA 1,500 24 50 150 Sandoz (including Wander) Switzerland 1,400 17 180 200 Bristol-Myers USA 1,400 18 90 210 Warner Lambert USA 1,300 14 70 220 Pfizer USA 1,300 23 100 170 Boehringer-Ingelheim (including Fher in Puerto Rico & Ireland) and companies managed through holdings in Luxembourg & Montreal and half of joint ventures with A.H. Robins Germany 1,300 28 120 210 Eli Lilly USA 1,200 27 150 160 Upjohn USA 1,100 19 120 130 Phone-Poulenc France 1,000 13 90 80 Takeda Japan 1,000 18 80 90 Glaxo UK 1,000 17 80 100 SmithKline USA 1,000 29 70 120 Squibb USA 900 15 60 110 Schering-Plough USA 900 28 70 130 Beecham (without nutrition) UK 800 22 50 100 Abbott USA 800 20 60 90 Roussell Uclaf France 700 11 50 80 Sterling Winthrop USA 700 17 40 120 Schering (Berlin) Germany 700 16 90 100 Johnson & Johnson USA 700 24 80 120 Fujisawa Japan 700 19 50 50 Montedison Italy 600 5 30 40 Shionogi Japan 600 13 60 70 ICI UK 600 19 50 90 Akzo Holland 600 11 60 80 Wellcome UK & Monaco 600 21 60 70 G.D. Searle USA 600 23 50 70 Sanofi France 500 7 30 30 Dow (including Lepetit) USA 500 12 40 60 American Cyanamid (Lederle) USA 500 15 50 70 Tanabe Japan 500 10 30 60