Novo Nordisk, Eli Lilly lead industrywide sales surge in Q4

In a year that started with more than two-thirds of biopharma companies posting year-over-year revenue declines in the first quarter, it has finished with an about-face for the industry as evidenced by quarterly reports presented over the last few weeks.

Of the industry's 25 most valuable companies that have revealed fourth-quarter results, 20 delivered a year-over-year increase in sales in the final quarter of the year, with 17 of those showing growth of at least 6%.

And of the five companies that posted year-over-year revenue declines, it wasn’t all negative news; four saw sequential revenue increases from the third to the fourth quarter.

The industry’s top revenue gainer in the fourth quarter was Novo Nordisk, which posted a 37% year-over-year sales increase. In three of the four quarters of 2023, the Danish company delivered the sharpest revenue increase among biopharma's top 25 companies ranked by market capitalization.

For the full year, Novo delivered a 31% increase in sales, reaching 232 billion Danish kroner ($33.7 billion). The haul vaulted the company into the industry's top 12 in annual revenue after Novo ranked No. 17 in 2022.

Accounting for 55% of the company’s sales in 2023 were diabetes and weight loss drugs Ozempic and Wegovy. The GLP-1 treatments racked up combined sales of $18.4 billion, up from $9.3 billion in 2022.

Mimicking the success of Novo was Eli Lilly, which managed a 28% revenue increase in the fourth quarter, also due largely to the booming demand for its metabolism-regulating drugs. While diabetes med Mounjaro generated sales of $2.2 billion in the quarter, obesity offering Zepbound pulled in an additional $176 million after its approval in November.

Despite the close attention the weight loss drugs have garnered, Lilly’s performance surprised analysts, such as Lee Brown of Third Bridge, who noted that Mounjaro “crushed” the consensus of $1.75 billion.

Lilly’s performance throughout last year was the biopharma industry in a microcosm. The company posted an 11% year-over-year decrease in revenue in the first quarter, which was attributed to declining sales of COVID antibodies. By the fourth quarter, Lilly's year-over-year increase was well into the double-digit percentages.

A few other companies—such as Merck, Roche, AstraZeneca and Gilead Sciences—also reported declining sales figures during the first quarter of 2023 because of a drop in COVID product revenue.

Other big gainers

Unlike the first quarter of 2023, when Novo was the only company in the industry with a double-digit revenue boost, several drugmakers scored big gains in the fourth quarter, including Daiichi Sankyo (26%), Amgen (20%) and Teva (15%).

Daiichi’s performance parallels the success of its burgeoning breast cancer drug Enhertu, which the company shares with AZ. The antibody-drug conjugate is projected to achieve sales of 384 billion Japanese yen ($2.6 billion) in the company's current fiscal year, which ends March 31. 

Amgen’s outsized bump in revenue came largely from products gained in its $27.8 buyout of Horizon Therapeutics, a deal the companies finalized a week into the fourth quarter. While those medicines accounted for $954 million of Amgen’s $8.2 billion revenue in the quarter, the company pointed out that it still accomplished a 5% revenue boost without the Horizon contributions.  

Teva’s sales increase in the fourth quarter is evidence that the company is heading in the right direction under new CEO Richard Francis. Each year from 2017, when Teva recorded sales of $22.4 billion, to 2022, when revenue shrunk to $14.9 billion, Teva posted an annual revenue decrease.

But the company has reversed the slide with 2023 sales of $15.8 billion. Doing the heavy lifting were Huntington’s disease drug Austedo, which saw a 28% increase in 2023 sales to $1.2 billion, and migraine treatment Ajovy, which was up 16% to $435 million last year.

Elsewhere, a wave of Big Pharma players each posted mid to high single-digit percentage sales increases in the fourth quarter. GSK managed a 9% gain, while Novartis grew sales by 8% and Johnson & Johnson posted a 7% increase. Merck and AstraZeneca each grew quarterly revenues 6% versus the same period in 2022.

In addition, European powerhouses Sanofi and Roche—which reported stagnant quarterly sales when measured in their home currencies—had revenue gains of 9% each at constant exchange rates.

Helping lift GSK, Sanofi and AZ late in 2023 were successful launches of new vaccines for respiratory syncytial virus (RSV). GSK reported sales of 1.24 billion euros ($1.53 billion) in the third and fourth quarter for its RSV shot Arexvy, which is for people ages 60 and older. Meanwhile, Sanofi and AZ-partnered pediatric shot Beyfortus generated 547 million euros ($592 million) in sales, a figure expected to double in 2024.

“Industry experts who we’ve spoken to believe the global market opportunity for RSV vaccines is substantial, possibly reaching ($9 billion to $10 billion) and supporting attractive growth for leading companies,” Third Bridge’s Brown noted.

Helping pave the way for the way for the revenue gain by Novartis was heart drug Entresto, which chalked up a 27% sales boost to $1.6 billion for the quarter. Merck, of course, was bolstered by cancer superstar Keytruda, which accounted for 45% of the company’s fourth-quarter revenue of $14.6 billion.

The momentum of the revenue gains for many biopharma companies through 2023 is reflected in Statista’s annual tabulation of overall industry revenue, which came to $1.607 trillion, up from $1.482 trillion during the prior year. It was a $125 billion revenue boost, which is the second-largest single-year increase since 2000. The largest one-year gain (at $138 billion) came when COVID-19 products hit the market in 2021.

Only five sales decliners

Because of plummeting demand for their COVID vaccines, Moderna (-45%) and Pfizer (-42%) reported the largest year-over-year sales declines in the fourth quarter.

While Pfizer's revenue for the quarter fell by $10 billion—from $24.2 billion in 2022 to $14.2 billion in 2023—sales of vaccine Comirnaty and antiviral Paxlovid dropped by a combined $11.1 billion. A good sign for Pfizer, however, was that excluding sales of the COVID products, revenues increased by 8%. Playing a leading role in the ex-COVID growth was RSV vaccine Abrysvo, which generated sales of $515 million in the quarter.

“We believe Pfizer's growth will accelerate as the company is now more focused on innovative drugs and vaccines,” Edward Jones healthcare analyst John Boylan wrote in a note to clients. “The company has research and development expertise and strong product diversification. Profit from the COVID-19 vaccine should further strengthen the company's financial position and allow for investment in internal drug development and acquisitions.”

AbbVie, meanwhile, saw a 6% drop in revenue in the quarter as generic competition took a bite out of the sales of Humira, which was down 41% to $3.3 billion. 

Gilead was down 4% in the quarter, continuing a trend for the company which has seen slight declines in annual revenues since 2021. There were positives, however, as Gilead’s sales were up 2% sequentially and 7% when excluding sales of COVID antiviral Veklury.

The lone drugmaker reporting a quarterly revenue decline both sequentially and year over year was Biogen, which was down 6% in both categories. Analysts at Mizuho Securities called the performance “weak all around,” with disappointing sales for spinal muscular atrophy drug Spinraza and multiple sclerosis therapy Vumerity, in addition to the slow launch of hyped Alzheimer's disease drug Leqembi.

Several companies have yet to report their fourth-quarter earnings, including Bayer and BioNTech. Other major companies that have yet to report are Merck KGaA, Viatris, UCB and Boehringer Ingelheim.