After six straight quarters in which Eli Lilly or Novo Nordisk achieved the highest year-over-year revenue growth among the top companies in the biopharma industry, there was a new champion in the third quarter—and it was a major surprise.
With a 32% increase in sales, Pfizer delivered the No. 1 bump among large drugmakers in the period, topping the sales growth figures for Novo (21%) and reigning champion Lilly (20%).
Pfizer’s performance came during a remarkable quarter of revenue growth for the industry. Of the industry's top 20 companies by sales, nine posted double-digit increases and just three saw declines. This contrasts, for example, to the first quarter of 2023, when Novo at 27% was the only company with a double-digit increase in sales and was among only six of the top 20 drugmakers that had a year-over-year (YOY) revenue boost.
As for Pfizer’s sales surge in Q3, it came after the company posted a revenue increase of just 2% in the second quarter and a decline of 19% in the first quarter of this year. During those periods, its results were still skewed by a binge of COVID product sales during the pandemic.
In the third quarter, part of Pfizer’s revenue increase (PDF) from $13.2 billion to $17.7 billion could be attributed to its acquisition of Seagen and the $854 million in additional sales brought by products from the Seattle cancer specialist.
But a much larger portion of Pfizer’s revenue increase came from an extraordinary rebound in sales of COVID antiviral Paxlovid, which generated $2.7 billion for the period. It was a $2.5 billion increase from sales of Paxlovid in the third quarter of 2023 and came because of a surge in the virus, the company said.
The performance took even Pfizer by surprise as it boosted its annual revenue projection by $1.5 billion on both ends to a new range of $61 billion to $64 billion.
The revenue bump came at an opportune time for Pfizer as faces pressure from activist investor Starboard, which has questioned the drugmaker’s recent M&A efforts and its lack of return on R&D spending. This week, the company revealed leadership changes that could help quell the uprising.
Is demand for obesity drugs maxing out?
As Pfizer supplanted Lilly and Novo at the top of the growth rankings, there were indications in the quarter that the juggernaut trajectory of the industry's closely watched diabetes and obesity drugs may finally be moderating.
Lilly’s 20% increase came after it had recorded five straight quarters of at least 28% YOY revenue gains. The company pointed out that its Q3 figure was skewed by its $1.4 billion sale of its portfolio of Zyprexa schizophrenia and bipolar drugs in the third quarter of last year.
Excluding the effect of the selloff, Lilly said that its revenue increased by 42% YOY in the third quarter. But while the sales of Lilly’s diabetes and obesity drugs, Mounjaro and Zepbound, reached a combined $4.4 billion, they fell far short of the analyst projection of combined sales of $5.4 billion.
The sequential sales performance of the products paints a more telling picture of the recent halt in their momentum.
Mounjaro pulled in $1.81 billion during the first quarter of 2024 and quickly grew the figure to $3.09 billion in the second quarter. Then in the third quarter, Mounjaro sales increased marginally to $3.11 billion. Zepbound saw a comparable trend, growing sales from $1.24 billion in the second quarter of 2024 to $1.26 billion in the most recent period.
Meanwhile, Novo saw a similar slide in the trajectory of its sales of GLP-1 drugs Ozempic and Wegovy, which also failed to measure up to the consensus projection.
It’s difficult to determine the impact compounding pharmacies in the U.S. have had on the sales of Lilly and Novo’s incretin products. Even though both companies have declared that their supply shortages are over, compounders continue to produce lower-priced knockoffs, which have become readily available online and at health spas throughout the U.S.
After telling compounding pharmacies that they needed to quit producing the copycats, the FDA backed off when an association representing the compounders filed a lawsuit against the U.S. regulator.
Aggravating the issue for the drugmakers is the uncertainty about the future with respect to the compounders, and how much damage to sales the knockoff products are causing. When Novo CEO Lars Fruergaard Jørgensen was asked during his company’s quarterly presentation what share of the market compounders owned, he said “Honestly, we don’t know.”
Other double-digit winners in Q3
Other top-20 companies that pulled off double-digit sales increases in the third quarter were Amgen (23%), AstraZeneca (18%) Takeda (13%), Sanofi (12%), Teva (12%) and Regeneron (11%).
The boost for Amgen is easily explained as a large portion of it can be credited to the company’s acquisition of Horizon Therapeutics, which hit the books at the beginning of the fourth quarter of 2023. Aside from the Horizon products, the California drugmaker still had a successful quarter as sales of its other pharmaceuticals still grew by 8% in the quarter, the company said.
AZ’s performance was the third quarter in a row in which it achieved double-digit sales growth as the company continues to ride its wealth of blockbusters that are in their prime, including heart treatment Farxiga, rare disease drug Ultomiris and cancer therapies Calquence, Imfinzi and Tagrisso.
Likewise, Takeda is riding a wave that has seen sales grow by double-digit figures in each quarter this year thanks to the continued success of ulcerative colitis drug Entyvio and its plasma-derived products, both of which achieved YOY increases of 20%.
The revenue boosts for Sanofi and Regeneron can be attributed largely to booming sales of their shared anti-inflammatory superstar Dupixent, which hit $3.8 billion worldwide in the quarter and now are annualizing at more than $15 billion, according to Regeneron CEO Len Schleifer. Expect the momentum to continue as Dupixent was recently approved to treat chronic obstructive pulmonary disorder (COPD), an indication with a large patient population.
Teva’s hefty increase was propelled by the success of the company’s generic and biosimilar medicines, especially in the U.S. where sales of the products were up 30% YOY.
Single-digit climbers in Q3
There were other noteworthy winners in the third quarter who had single-digit sales increases. Novartis (9%) continued its consistent growth trajectory. In each of the last six quarters, the Swiss company has achieved sales increases of between 7% and 12%.
After declines in three of the four quarters of 2023, Bristol Myers Squibb has seen sales increases in the last two periods, with its most recent growth figure reaching 9%. Gilead, which had only one quarter of sales growth in 2023, has seen sequential increases throughout this year and delivered 7% sales growth in the third quarter.
AbbVie has realized similar success. After seeing quarterly sales declines of at least 5% in each of the four quarters of 2023 as megablockbuster Humira succumbed to generics in the U.S., the Illinois giant has rebounded with two straight quarters of 4% growth thanks to the success of Humira follow-ons Rinvoq and Skyrizi. In a passing-of-the-torch footnote, sales of Skyrizi exceeded those of Humira for the first time in Q3.
As for behemoth Johnson & Johnson, it had a sales increase of 5% in the third quarter, which is consistent with its recent steady performance. In every quarter but one since the start of 2023, J&J has seen sales increases of between 4% and 7%.
Meanwhile, Merck overcame a second straight quarter of rapidly declining sales of blockbuster HPV vaccine Gardasil in China to post an overall 4% revenue increase.
Only 3 decliners in Q3
Among the three top-20 companies in the industry that saw a YOY drop in sales in the third quarter, the lone newcomer was GSK, which was down by 2% as the company dealt with rapidly declining sales of RSV vaccine Arexvy in the wake of CDC guidance changes.
Meanwhile, Bayer saw a drop in combined sales of its pharma and consumer health divisions by less than 1%. The small decline could actually be viewed as a positive considering that the troubled company has had larger sales slides in every quarter since the start of 2023.
Also realizing an expected sales decline in the third quarter was Viatris, which was down 5% as the company continues to divest. Viatris has not accomplished sales growth in any quarter since the beginning of 2023.