PharmaValues 2017 Strategic Conclusions
■ Credit Suisse PharmaValues is a proprietary valuation tool for the Pharma and Biotech industry. It offers a product-by-product valuation for companies based on the Net Present Value (NPV) over the life-cycle of each drug in their portfolios. The long term track record of picking Major Pharma and Japanese stocks based on EV/NPV is strong with a seven-year market neutral return of 95%, and a 2016 YTD performance of +36%.
■ 2017 Strategic Conclusions: In this Ideas Engine report, we compare 48 global therapeutics companies with 2016E aggregate pharmaceutical sales of $584bn, total sales of $745bn, and over $120bn of annual R&D. We set out detailed conclusions on valuation and six strategic metrics that we believe are key to long-term success in the Biopharmaceutical industry.
■ Major Pharma: Lilly scores highest overall with AbbVie the highest scoring company on fundamentals ex-valuation. Sanofi is the highest scoring EU Major with Novartis scoring well strategically. Pfizer, AstraZeneca and Novo Nordisk score poorly. Pfizer is weak across the board, AZN has a very high EV/NPV valuation and Novo is highly exposed to US price pressure.
■ Specialty Pharma: Ipsen scores the highest even excluding valuation, with strong top line growth, a move to specialist products and no patent headwinds. Recordati scores the worst as this methodology cannot capture acquisitiondriven growth. Ignoring valuation, Orion remains the weakest strategically as partnered R&D will not be derisked until 2018+.
■ Japan: KH Kirin scores the highest, trading at EV/NPV of 0.9 and Eisai scores the lowest. Just looking at strategic factors, Ono looks well set with long-term royalty income from BMY, with M Tanabe scoring poorly on all metrics despite rising royalty income from partner JNJ on Invokana.
■ Biotech: Vertex scores the highest with a successful focus on cystic fibrosis. Amgen scores the lowest both strategically and including valuation.