Growth in emerging markets may be slowing, but pharma sales there are still outpacing those everywhere else. And if recent numbers are any indication, AstraZeneca ($AZN) is topping its rivals for emerging markets expansion.
That's the message in a new report from Bernstein & Co. analysts, who looked at sales growth for 7 Big Pharma companies over the past few years--and the first quarter of 2015 in particular.
AstraZeneca's sales in the developing world jumped by 14% over the last four quarters--four percentage points ahead of next-place companies Pfizer ($PFE) and Sanofi ($SNY)--and beat all comers quarter-by-quarter as well. Much of that growth came in China, which now accounts for almost half of AstraZeneca's emerging markets sales.
Slowest growth? That would be Merck & Co. ($MRK), with 6% over the last four quarters, and Eli Lilly & Co. ($LLY), with 4% for Q1 alone. No word on GlaxoSmithKline ($GSK), which had suffered after a bribery scandal in China; the U.K.-based drugmaker stopped breaking out emerging markets sales at the end of 2014. Bristol-Myers Squibb ($BMY) doesn't specify its emerging markets sales either.
Overall, the 7 companies averaged 8.8% growth in emerging markets for the first quarter and 9.4% over the past four. That's certainly less than the double-digit growth rates of several years ago, given increasing pricing pressures in pharma and an economic slowdown overall. But compared with growth elsewhere, it's a windfall. In the U.S., these companies' sales slipped by 1.3% over the past four quarters and grew just 2% in Q1. Other international markets suffered even more, with 2% slippage for the four-quarter period and 3.9% for Q1.
Which drugmakers depend most on emerging markets? Sanofi reaps the biggest share of its revenue--32%--in those countries, with AstraZeneca (27%) and Novartis ($NVS) (26%) close behind. It should be noted, however, that AstraZeneca's big share partly depends on the fact that its U.S. sales have been dropping, thanks to Nexium generics. Pfizer and Roche ($RHHBY) each count 24% of their sales in the developing world, while Eli Lilly relies the least on emerging markets, with 16% of its sales there.
|Bernstein's Tim Anderson|
Despite the slowdown in emerging markets, investing there still makes sense, Bernstein's Tim Anderson said in the investor note, particularly as a tactic for long-term growth in branded sales. "Despite being a lower margin business (margins are about half that of developed markets), multinational drug companies are more than covering their costs," Anderson says, "and their collective commercial presence in EMs sets the stage for the longer-term, gradual, yet inevitable shift from older off-patent medicines to more lucrative, novel, on-patent medicines."
Special Reports: Top 15 pharma companies by 2014 revenue | Top 10 drugmakers in emerging markets