Big innovation shift to small pharma? Rookies grab lead in annual poll—and look to stay put

When it comes to pharma innovation, bigger isn’t always better anymore. Nowhere was that more apparent than in IDEA Pharma’s recent annual roundup of pharma’s best innovators for 2021.

Three smaller pharma companies landed in the top five—Regeneron, Seagen and Incyte—and two had never before cracked the top 30. Two other smaller companies made the top 30 list for the first time: Moderna at No. 20 and BeiGene at No. 27.

Eli Lilly and Roche still took the top two spots, signaling that Big Pharma certainly isn't out of the innovation race. And smaller companies have jumped into the top innovation ranking before, typically on a one-drug success. For example, Alexion was No. 6 last year after its nod for Ultomiris but fell to No. 23 this year.

Big hits do account for some of this year’s success, but there are signs the industry is shifting more permanently.

“I think this year proves you don’t need to be a large player anymore to launch a drug, especially with the more rare and novel formats of drugs,” IDEA Pharma CEO Mike Rea said.

“It’s probably a function of where the industry’s going," Rea added. "Most of the approvals in the U.S. last year weren’t in the top 30 anyway, so I think we’re seeing big companies struggling for having a point rather than just relying on their scale to bring them through.”

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Incyte, for instance, had two novel drug approvals, the same as No. 1 Eli Lilly. And Incyte, which landed at No. 5 in the ranking, isn’t empty-handed for future rankings, either. It ranked second on IDEA Pharma’s companion Invention Index, which measures pipeline invention and novelty.

Incyte grew 24% in 2020, partly in thanks to a 15% sales hike for JAK inhibitor Jakafi. But the pharma also nabbed approvals for Monjuvi in lymphoma and Pemazyre for a rare bile duct cancer.

Still on the horizon is an expansion for rheumatoid arthritis drug Olumiant, with partner Eli Lilly, which is gunning for an approval in atopic dermatitis. And Incyte also joined into the COVID-19 race with Jakafi; while the drug didn't meet its statistical endpoint, it did show improvement in severe COVID-19 patients, and Lilly plans to continue working with the FDA on a potential approval.

Eneida Bushi, IDEA Pharma strategy consultant, noted Incyte’s unique position on both indexes, adding “Again, it’s one of those interesting smaller companies that scores high on its pipeline potential, but also its ability to bring drugs to the market successfully."

Moderna is another example of the shift in innovation from Big Pharma. Its COVID-19 vaccine pushed the company's market cap to $67 billion, but, as successful as that one product is, the vaccine essentially served as validation for its mRNA technology and what it can do in the future.

"Moderna was a company waiting for an opportunity,” Rea said. “As their market cap shows, they used 2020 as a proof of concept for everything else they’re planning to do after that.”

Even Regeneron, which straddles the line between large and small pharma, impressed with its robust year. It jumped to No. 3 from No. 10, following up on a similar seven-spot climb from 2019. Its revenue grew 30%, while its R&D spend jumped even more to 36%.

Though its partner drug with Sanofi, Dupixent, led the company's growth and won a new approval—a first for esosinophilic esophagitis—Regeneron’s successful COVID-19 monoclonal antibody cocktail sealed its innovator status. Still up for potential FDA nods are an antibody treatment in advanced multiple myeloma and a priority review for Libtayo in first line non-small cell lung cancer.

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The other top five newcomer—oncology specialist Seagen, which shortened its name from Seattle Genetics in 2020—landed on the list at No. 4 with the approval of TYK inhibitor Tukysa and the continuing strength of Adcetris and Padcev.

Seagen also has a whopping nine pipeline programs and has already filed a biologics licensing application along with Genmab for tisotumab vedotin for patients with recurrent or metastatic cervical cancer.

IDEA Pharma measures innovation across a wide range of factors. One of those is its proprietary “freshness index,” which calculates the percentage of company sales generated by products launched in the last three and five years.

It also looks at regulatory wins and financial performance in revenue growth and R&D spending plus key events such as label expansions, study successes and failures, contracts with major payers and changes in development, research and collaboration strategies.

While the small pharma companies are showing a new bravado in going it alone on drug launches, Rea pointed out that Big Pharma has contributed to their success—and its own innovation problems—as well

“As the large pharma guys have steered the industry toward that (specialty) space, they don’t have any advantage playing there. They may have created a game that’s hard for them to win,” he said. “If you’re Johnson & Johnson, you’re probably not going to make up your revenue from having 30 or 40 small, rare orphan drugs going forward. You need to continue to look for the big revenue ones.”