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Goldman Sachs: 3 Stocks With Double-Digit Upside

Goldman Sachs: 3 Stocks With Double-Digit Upside

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The combination of good news and bad news makes the markets an intriguing mix of risk and reward. Weighing in on current market conditions, Goldman Sachs strategist Alessio Rizzi sees reason to buy in now – but for the long term.

“While we believe that recent developments support the recent risk-on move, the more constructive pricing of growth and risks lowers the bar for disappointments,” says Rizzi.

Rizzi is not the only Goldman expert who sees opportunities now. The firm’s analysts have been noting a number of bullish stock moves -- companies that are well-positioned to make gains in coming months, even in a bear market.

We’ve used the TipRanks database to pull up the details on three stocks that Goldman sees as particularly compelling – in fact, so compelling that the firm has upgraded each of them to a Buy rating.

Science Applications International (SAIC)

The first stock on our list, Science Applications, is a consulting firm in Washington DC’s Northern Virginia Suburbs. The beltway consultants generally are heavily dependent on government contracts, and SAIC is no exception. The company provides engineering, scientific, and technology expertise to governmental service agencies.

If there is one certainty in the modern world, it’s that government will always grow. That said, there is always a market for government consulting. SAIC uses that basic truth to generate solid returns from contracts with the Washington establishment. In Q4 2019, the most recent reported, the company showed $1.58 per share against a forecast of $1.32, based on $1.54 billion in quarterly revenue. The EPS number was up 35% yoy, while the quarterly top line showed 29% growth.

Covering this stock for Goldman Sachs, Gavin Parsons writes of SAIC, “We expect SAIC organic revenue growth to accelerate to 4.5% this year from (1.4%) last year... We believe the market views this as a show-me story and as growth improves sequentially throughout FY21 the stock should re-rate.” The analyst added, "SAIC currently trades at a 12.2% free cash flow yield on our CY21 estimate, compared to peers at 8.4%. There has been a discount as SAIC grew more slowly, but we expect this to close as organic growth accelerates."

In line with his view that the stock will appreciate going forward, Parsons has upgraded his stance from Neutral to Buy. His price target on the stock, which he raised from $85 to $97, implies an upside of 19% for the coming year. (To watch Parsons’ track record, click here)

Science Applications has a Strong Buy rating from the analyst consensus, with 10 recent reviews of which no fewer than 9 were to Buy. The only hold-out rated the stock a Hold. Shares are selling for a discounted price of $81.55, and the average price target matches Parsons’, at $97. (See SAIC stock analysis on TipRanks)

ADTRAN, Inc. (ADTN)

Alabama-based ADTRAN works in the telecom sector, providing equipment and other products for networking and internetworking applications. The company has a market cap of $465 million, and in addition to the US, has offices in Berlin, Munich, and Hyderabad.

Networking is a service in high demand – especially during this current time of heavy social distancing policies. ADTRAN’s stock performance reflects that demand: the company saw a dip when the bottom dropped out of the market, but is actually trading higher now than it was when the bear began.

The first quarter numbers also show the company’s strength. For Q1, ADTRAN reported GAAP EPS of 2 cents per share, an off-the-charts improvement form the 22-cent loss in the year-ago quarter. The earnings gain was powered by stronger revenues, which came in at $143.8 million, up 19% yoy and beating the forecast by 2%. International sales were the strongest growth segment for the company in Q1.

With a quarter like that, it should be no surprise that ADTRAN maintains its dividend. The 9-cent per share payment exceeds current earnings – but the company has a 16-year history of keeping up the payments. And with a yield of 3.7%, the stock brings a far stronger return than Treasury bonds, and nearly double the return of the average dividend among S&P-listed companies.

Goldman Sachs analyst Rod Hall has bumped his stance on ADTRAN shares from Neutral to Buy. Hall backed his rating based on heavy use of networking tech during COVID-19 pandemic, and the growing trend toward increasing networking.

“We see the company as one of the beneficiaries of increased broadband spending amid COVID-19 related shutdowns. We believe that broadband build-out activity has continued during the shutdown due to strong bandwidth demand created by increasing usage of cloud based collaboration tools and OTT services. We expect broadband investments to continue due to increasing competition from 5G FWA and potential for new federal broadband programs,” the analyst noted.

Hall’s Buy rating is supported by his $13 price target, which implies a robust growth potential of 41% for the stock. (To watch Hall’s track record, click here)

ADTRAN is another company that gets a Strong Buy consensus rating from Wall Street’s analysts. With 4 recent reviews on record in the TipRanks database, 3 are Buys and 1 is a Hold; clearly Rod Hall’s upbeat view of the company’s prospects is the norm. Shares are affordable, selling for just $9.22, while the average price target of $11.17 suggests room for a one-year upside potential of 21%. (See ADTRAN stock analysis on TipRanks)

Allison Transmission (ALSN)

Last on our list is $3.9 billion mover in the automotive industry. Allison is the world’s largest manufacturer of automatic transmissions for the commercial vehicle segment, and a major builder of propulsion systems for electric-hybrid vehicles. The company’s powertrain products are used by more than 300 car makers worldwide, for busses, trucks, construction vehicles and equipment, and military vehicles. Allison is headquartered in Indiana, remains an important Rust Belt manufacturer.

Even in today’s climate of lockdowns and stay-at-home orders, supply chains and other vital infrastructure needs to keep moving. The market for commercial duty vehicles is still solid, and Allison’s customer base is not going away.

The Q4 earnings, the most recent reported, reflect the company’s strong position. EPS was 85 cents and revenue came in at $617 million, both well over the forecasts. The earnings support a reliable dividend, which was paid out in March. That payment, of 17 cents, represented a 13% increase from the previous quarter. The annualized payment, at 68 cents, gives a yield of 2%, in line with the broader market average. The key point in this dividend is not its size, but its reliability: Allison has made sure to keep up the payments for the last 8 years, making the dividend attractive to return-minded investors.

Jerry Revich, one of Goldman Sachs’ 5-star analysts, opined, “We upgrade ALSN to Buy as we believe (i) truck production is set to bottom over the next six months, (ii) ALSN’s low fixed cost structure positions the company to deliver cash flow at the trough, and (iii) ALSN’s competitive position will allow continued pricing ahead of material costs in the next cycle.”

"We forecast ALSN’s margins to return to levels last reached in the 2009 financial crisis. ALSN benefits from strong pricing advantage over its low fixed cost structure which gives it ample room to transition through while generating significant cash flow. We expect margins to improve starting 2021E along with resumption of growth in truck production levels," the analyst concluded.

Revich includes a $44 price target with his Buy rating, showing his confidence in a 31% upside for the transmission maker. (To watch Revich’s track record, click here)

Allison Transmission has 9 recent analyst reviews, with a split of 5 Buy ratings, 3 Holds, and 1 Sell giving the stock a Moderate Buy consensus rating. The company does show the highest one-year upside potential of the stocks on this list – with a share price of $33.49, the average price target of $50.63 indicates a strong 51% possible growth. (See Allison stock analysis on TipRanks)

The post Goldman Sachs: 3 Stocks With Double-Digit Upside appeared first on TipRanks Financial Blog.

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Economic Trends, Risks and the Industrial Market

By a show of hands, I.CON West keynote speaker Christine Cooper, Ph.D., managing director and chief U.S. economist with CoStar Group, polled attendees…

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By a show of hands, I.CON West keynote speaker Christine Cooper, Ph.D., managing director and chief U.S. economist with CoStar Group, polled attendees on their economic outlook – was it bright or bleak? The group responded largely positively, with most indicating they felt the economy was doing better than not.  

Four years ago, the World Health Organization declared COVID-19 a global pandemic, seemingly halting life as we knew it. And although those early days of the pandemic seem like a long time ago, we’re still in recovery from two of its major consequences: 1) the $4 trillion in economic stimulus that the U.S. government showered on consumers; and 2) the aggressive monetary policies that have created ripple effects on the industrial markets. 

Cooper began with an overview of the economic environment, which she called “the good news.” The nation’s GDP is strong, and the economy gained momentum in the second half of 2023 – we saw economic growth of 4.9% and 3.2% in Q3 and Q4 respectively — much higher than expected. “The reason is consumers,” Cooper said. “When things get tough, we go shopping. This generates sales and economic activity. But how long can it last?” 

Consumer sentiment continues to be healthy, and employment is good, although a shortage of workers could impact that moving forward. The U.S. added 275,000 jobs in January, far exceeding expectations. “The Fed raising interest rates hasn’t done what it normally does – slow job growth and the economy,” said Cooper. In addition, the $4 trillion given to keep households afloat during the pandemic has simply padded checking accounts, she said, as consumers couldn’t immediately spend the money because everyone was staying home, and the supply chain was clogged. The money was banked, and there’s still a lot of it to be spent. 

Cooper addressed economic risks and the weak points that industrial real estate professionals should be mindful of right now, including mortgage rates that remain at 20-year highs, stalling the housing market, particularly for new home buyers. Mid-pandemic years of 2020-2021 had strong home sales, driven by people moving out of the city or roommates dividing into two properties for more space and protection against the virus. Homeowners who refinanced in the early stages of the pandemic were fortunate and aren’t willing to list their houses for sale quite yet. 

“The housing market is a big driver of industrial demand – think furniture, appliances and all the durable goods that go into a home. This equates to warehouse space demand,” said Cooper. 

Interest rates on consumer credit are spiking and leading economic indexes are still signaling a recession ahead. Financial markets are indicating the same, with a current probability of 61.5% that we will be in a recession by 2025. However, Cooper said, while all signs point to a recession, economists everywhere say the same thing as the economy seemingly continues to surprise us: “This time is different.” 

Consumers are still holding the economy up with solid job and wage gains, yet higher borrowing costs are weighing on business activity and the housing market. Inflation has eased meaningfully but remains a bit too high for comfort. We’ve so far avoided the recession that everyone predicted, and the Federal Reserve appears ready to cut rates this year.  

For the industrial markets, the good news is that retailer corporate profits are beginning to bounce back after slowing in 2021 and 2022, with retail sales accelerating.  

A slowdown in industrial space absorption was reflected in all the key markets – Atlanta, Chicago, Columbus, Dallas-Fort Worth, Houston, the Inland Empire, Los Angeles, New Jersey and Phoenix – but was worst in the southern California markets, which have since been rebounding.  

“Supply responded to strong demand,” Cooper said. “In 2021, 307 million square feet were delivered, followed by 395 million in 2022. In 2023, we saw 534 million square feet delivered – that’s almost 33% higher than the year before.” 

The top 20 markets for 2023 deliveries measured by square feet are the expected hot spots: Dallas-Fort Worth (71 million square feet) leads the pack by almost double its follower of Chicago (37 million), then Houston (35 million), Phoenix (30 million) and Atlanta (29 million). Measured by share of inventory, emerging markets like Spartanburg, Pennsylvania, topped the list at 15 million square feet, followed by Austin (10 million), Phoenix and Dallas-Fort Worth (7 million), and Columbus (6 million). 

“Developers are more focused on big box distribution projects, and 90% of what’s being delivered is 100,000 square feet or more,” Cooper said. Around 400 million square feet of space currently under construction is unleased, in addition to the around 400,000 square feet that remained unleased in 2023. “Putting supply and demand together, industrial vacancy rate is rising and could peak at 6-7% in 2024,” she said. 

In conclusion, Cooper said that industrial real estate is rebalancing from its boom-and-bust years. Pandemic-related demands and accelerated e-commerce growth created a surge in 2021 and 2022, and the strong supply response that began in 2022 will continue to unfold through 2024. With rising interest rates putting a damper on demand in 2023, vacancies began to move higher and will continue to rise this year.  

“Consumers are spending and will continue to do so, and interest rates are likely to fall this year,” said Cooper. “We can hope for a recovery from the full effects of the pandemic in 2025.” 


This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON West 2024. Learn more about JLL at www.us.jll.com or www.jll.ca.

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Pharma and biotech’s top R&D spenders in 2023: a $153B total with M&A as a focus

At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off…

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At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off in Q4 as the industry’s biggest R&D spenders either rolled the dice on the back of their blockbuster bonanzas, were forced to address gaping holes in the pipeline in the face of looming patent expirations, or simply had no choice in the face of repeated setbacks.

Bioregnum Opinion Column by John Carroll

For some, it was all of the above.

As a result, Merck flipped into the lead position generally occupied by Roche with an M&A-inflated expense line for research. The companies joined a hunt for new drugs frequently focused on Phase III; premiums are in — heavy preclinical risks are out of favor. The majors followed some well-worn paths into immunology and oncology. And 2024 kicked off with a new round of buyouts and licensing deals.

The sudden end of Covid as a vaccine, drug and diagnostic market left the likes of Pfizer scrambling to convince investors that they had an exciting new plan. (It’s not working so far.) Eli Lilly has become one of the most valuable companies on the planet as obesity drugs go mainstream. Leaders like Takeda kept upping the ante on the R&D budget as the numbers frayed, with all but Pfizer and Bristol Myers Squibb — two of the most deeply off-balance biopharmas — spending more in 2023. Across the board, we saw $153 billion accounted for in R&D budget lines for last year — which would have registered as a record even without the sudden bolus of spending at Merck.

New, promising drugs at biotechs aren’t getting cheaper. And some of the blockbusters pharma has to cover as the patent cliff approaches will demand multiple replacement franchises.

The Big 15 have the money, desire and need to do much, much more in R&D. And all signs indicate that we’ll see more through 2024.

  • Merck
  • Roche
  • J&J
  • Novartis
  • AstraZeneca
  • Pfizer
  • Eli Lilly
  • Bristol Myers Squibb
  • GSK
  • AbbVie
  • Sanofi
  • Gilead
  • Takeda
  • Amgen
  • Novo Nordisk

1. Merck: The BD team is remaking the pipeline, and they are moving fast

  • R&D spending 2023: $30.5 billion
  • R&D spending 2022: $13.5 billion
  • Change: +125%
  • Revenue: $60.1 billion
  • R&D as a % of revenue: 51%
  • R&D chief: Dean Li
  • Ticker: $MRK — up 16% in the past year

The big picture: Merck moved up to the top of the list this year by bundling a mother lode of M&A and drug licensing deals into the R&D expense line. Otherwise, the top slot would have gone to Roche, the traditional top title holder in the R&D 15.

Merck has been parlaying its unchallenged position as number one in the PD-1 game with Keytruda — a drug that earned $25 billion last year but will face a loss of exclusivity as patents start to expire in 2028 — into a host of big deals in 2023. Keytruda, meanwhile, has cruised to 39 approvals, leaving Bristol Myers’ Opdivo in its wake.

Too much commercial success, though, doesn’t translate into unending praise. Analysts had been grumbling for some time that Merck wasn’t doing enough to diversify its pipeline bets. But that’s been changing.

Merck tallied $5.5 billion upfront for its Daiichi Sankyo deal — picking up rights to three ADCs in the move — along with the across-the-slate hikes in costs for clinical programs, bigger payrolls and benefits. There was another charge for the $11.4 billion that went to buying Prometheus and Imago. Prometheus accounted for $10.8 billion of that — one of the biggest deals that followed the $11.5 billion Acceleron buyout in 2021. With $690 million in cash for a group of partners that includes Moderna, Orna and Orion.

Merck kicked off the new year with a $680 million buyout of Harpoon Therapeutics, underscoring its enduring interest in the oncology market. And it’s leaving no popular stone unturned, capturing attention with its expressed interest in GLP-1 combos as the next generation of weight loss drugs takes shape.

Merck CEO Rob Davis also recently made it clear that the pharma giant can afford more $1 billion-to-$15 billion deals, making it a top candidate for more deals in 2024.

Merck’s firepower on the deals side, though, is needed after some deep wrinkles marred the pipeline plan, like the FDA’s back-to-back CRLs for chronic cough drug gefapixant. The data, however, never matched up to Merck’s rhetoric. Failures in Alzheimer’s and depression underscored Merck’s traditional ill fortunes in neuro.

Merck has a few years to plan for its next big thing. They show every sign of remaining focused on the big prize ahead.


2. Roche: 2023 was a tough year. Will 2024 be any better on the R&D side?

  • R&D spending 2023:  $16.1 billion/group — pharma and diagnostics (14.2 billion CHF)
  • R&D spending 2022: $16 billion/group (14.1 billion (CHF)
  • Change:
  • Revenue: $67 billion (58.7 billion CHF, -7% from 63.3 billion CHF in 2022)
  • R&D as a % of revenue: 24%
  • R&D chiefs: Hans Clevers (pRED), Aviv Regev (gRED), CMO Levi Garraway
  • Ticker: $RHHBY — down 4.8% in the past year

The big picture: It’s not easy being Roche. The behemoth has long had a near-omnivorous approach to R&D, buying up and down the pipeline at all stages with a big appetite for oncology ahead of neuro, ophthalmology and immunology. This year, it’s had to contend with the elimination of its Covid revenue, once a big player on the diagnostics side as testing soared during the pandemic. They’ve had to lower investors’ expectations of 2024 sales to an embarrassingly modest level and saw their stock price slide.

It’s surprising they have any growth, given the corresponding knockoff competition building for Lucentis and Esbriet, but you can’t play with market expectations. They’ll kill you every time you’re off.

Roche found some silver linings in the Vabysmo franchise and they’ve been a significant player on the M&A side, scoring the Carmot buyout for $3 billion after bagging Telavant for $7.1 billion back in October, paying a price for something Pfizer all but gave away to Roivant. James Sabry and the BD team, meanwhile, have kept up their globetrotting ways, uncorking a slate of deals for JP Morgan.

Sabry moved to global BD chief at Roche after winning his spurs at Genentech, and he’s been in the game for quite a long time. His résumé includes a stint as a biotech CEO. He’s the doyen of dealmakers and isn’t sitting on the sidelines. Hope grows eternal at Roche, and to keep it growing, Sabry has to stay busy.

“We have in total 12 NMEs that could potentially transition into a Phase III during this year,” CEO Thomas Schinecker told analysts hopefully during their Q4 call.

On this scale, Roche tends to do things on a wholesale basis. So when execs recently unveiled a pipeline review, they mapped 146 programs covering 82 new molecular entities. That can be hard to keep up with. If raw numbers like that were a good indicator of future success, though, Roche wouldn’t have these troubles.

It’s less difficult to follow the culls. That includes a slate of neurology drugs, with several axed from the oncology area. The write-offs include the longtime disappointment crenezumab, which had been partnered with AC Immune in Alzheimer’s. Roche recently handed back crenezumab as well as semorinemab after working with AC Immune for close to an R&D generation. Some analysts gave up long ago.

We’ve also been hearing complaints about a lack of upcoming pivotal clinical data to arouse enthusiasm. But Roche has two big R&D groups at work trying to counter those impressions, with gRED (Genentech) and pRED (the traditional Roche research group) at bat. They now have a straight-up GLP-1/GIP drug in the clinic for obesity, with oral therapies in the works alongside many others. It may be late to the obesity game with the Carmot buyout, but Roche still sees opportunities worth paying for.

Execs are promising to play a better R&D game, prioritizing their best assets and piling on resources. But Roche has always been willing to invest heavily in R&D. Now the company needs to see some clinical cards fall its way. This has not been a patient market.


3. J&J: Under new management, J&J doubles down on the innovative side of R&D. Can they still surprise us?

  • R&D spending 2023: $11.96 billion in meds
  • R&D spending 2022: $11.64 billion in meds
  • Change: Up 3%
  • Revenue: $54.7 billion (pharma side)
  • R&D as a % of spending: 21.8%
  • R&D chief: John Reed
  • Ticker: $JNJ —  up 5.3% in the past year

The big picture: J&J typically has weighed in heavy on R&D, particularly if you add its medtech work to the total. Even after splitting that out, though, it’s still in the top five, hoovering up large numbers of early-stage licensing deals while occasionally nabbing something major in the $1 billion-plus category.

Last year the pharma giant punted its consumer division, following the footsteps of many major industry outfits, and shut down its work in infectious diseases and vaccines. RSV, a highly competitive field now, went out the window with a host of smaller programs and alliances. Its major fields of interest zero in on oncology, immunology, cardio and retinal disorders. And they chipped in close to $2 billion to join the ADC hunt in January with its acquisition of Ambrx.

J&J earned a rep for out-of-the-box thinking in oncology under former oncology R&D chief Peter Lebowitz, striking a deal with China’s Legend that delivered an approved drug — Carvykti — and following up with a $245 million pact to gain worldwide rights to another CAR-T from CBMG, a low-profile Chinese biotech that erupted into mainstream view with its Big Pharma deal.

Now the big questions about J&J focus on its new leadership after Joaquin Duato moved into the CEO’s role in 2022 and John Reed — leaping into his third Big Pharma R&D posting in 10 years, following Roche and Sanofi — takes command of the global R&D side of the company.

They have plenty of motivation to hustle up major new approvals. Stelara — raking in more than $10 billion a year — will see its patent protection erode in the US in 2025, with Europe moving first this year. That will take a few big wins to cover.

But J&J has been making big promises for years. Just a few months ago, it touted 20 drugs in the pipeline that could fuel 5% to 7% growth through 2030. One of the prime candidates is a drug they picked up from Protagonist: JNJ-2113, an IL-23 they believe can bring in blockbuster revenue in immunology. J&J, though, is likely far from done when it comes to new deals. Oncology R&D has been changing rapidly in the wake of the Inflation Reduction Act, with researchers moving up OS as a primary initial focus in Phase III. And it’s going to take a behemoth effort to deliver on these numbers, with likely failures and shortfalls along the way.

Don’t look for J&J to cut R&D anytime soon. They have a big agenda.


4. Novartis: Another streamlining move is wrapping up as Novartis vows to get back to basics in R&D — again

  • R&D spending 2023: $11.37 billion
  • R&D spending 2022: $9.17 billion
  • Change: Up 24%
  • Revenue: $45.44 billion
  • R&D as a % of revenue:  27%
  • Development chief: Shreeram Aradhye, NIBR chief: Fiona Marshall
  • Ticker: $NVS — up 31% in the past year

The big picture: Novartis CEO Vas Narasimhan has been crystal clear about the Big Pharma’s M&A strategy. He’s sticking with the industry sweet spot now in favor: picking up late-stage assets below the $5 billion range. A few weeks ago, that led Novartis to MorphoSys, where they have been partnered for years while distancing themselves from rumors of a pricey Cytokinetics play.

And it springs right off another $3 billion acquisition — for Chinook — that went straight to positive Phase III data for the kidney drug atrasentan, which likely wasn’t much of a surprise inside Novartis.

These days, Narasimhan and Novartis are all about focus. They want to make a deeper impact where they emphasize their priorities — cardio, immunology, neuroscience and oncology. And they also want to be leaders where they are centered, slashing oncology while emphasizing at every opportunity that they jumped out front in radioligands, now a hot commodity in R&D.

Lest anyone forget, Novartis was a pioneer in autologous CAR-T and has held on as it slowly works through all the challenges a cutting-edge technology can inspire.

Narasimhan had been five years before the mast as CEO, after being promoted from development chief, and he’s revising a pipeline strategy away from something he describes now as akin to everything everywhere all at once. Downsizing in 2023 was the big focus, dropping programs, reassigning scientists and promising a swifter pace — a never-ending problem in Big Pharma land. Narasimhan has also been pushing “seamlessness,” projecting a new era of cooperation among scientists and sales.

There’s nothing new about streamlining at Novartis, though. Narasimhan had a billion dollars of cuts in mind back in the spring of 2022. And periodically, the company has been well-known for going in and ironing out budgets. Changes have included an exit for development chief John Tsai, now a biotech CEO, who was replaced by Shreeram Aradhye. Fiona Marshall took the helm at NIBR in the fall of 2022, taking the place of Jay Bradner, who left and later wound up running R&D at Amgen.

The recent cleanup at Novartis included the end of the deal for BeiGene’s PD-1, an area that proved enormously frustrating to Novartis. Their TIGIT pact ended last summer. Phase II for GT005, a gene therapy it picked up in the $800 million Gyroscope buyout, didn’t end well. That program got the axe. And their anti-TGFß antibody, picked up in a small deal with Xoma nine years ago, failed after execs once billed it as a high-risk, high-reward play. Other setbacks include Adakveo, which faced global regulatory challenges following the failure of the Phase III confirmatory study. At the beginning of this year, there was a snafu in Phase III for ligelizumab, once billed as a top asset for peanut allergies.

Warning clouds have also formed around their top-selling drug Entresto, as Novartis fights a battle against the IRA and price negotiations.

The CEO, though, has been able to transition while the stock price was headed up, with a few big drugs driving revenue growth as a struggling Sandoz finally got the heave-ho in a spinout. Their franchise drug Kisqali, for example, is now billed as a $4 billion earner at the peak. As a result, their story has played well on Wall Street. Investors want to see the money and the trajectory. R&D follows sales in priority when it comes to the majors.


5. AstraZeneca: Pascal Soriot never takes defeat lying down. And that stubborn attitude has delivered big dividends as another big R&D test takes shape

  • R&D spending 2023: $10.93 billion
  • R&D spending 2022: $9.76 billion
  • Change: Up 12%
  • Revenue: $45.8 billion
  • R&D as a % of revenue: 24%
  • R&D chiefs: Sharon Barr (biopharmaceuticals); Susan Galbraith (oncology)
  • Ticker: $AZN — up 1.8% in the past year

The big picture: Back in 2018, AstraZeneca reported R&D expenses just under $6 billion. In the past five years, that big line item has grown 85%, and investors have seen the stock price grow 56%.

The R&D leaders at AstraZeneca have changed, but CEO Pascal Soriot has become a longtime fixture at the company. During his stint he took the weakest pipeline in biopharma and turned it into one of the strongest, building a slate of blockbuster oncology franchises while building a research machine based in Cambridge, UK, that consumes about $1 out of every $4 in revenue. He bet the ranch on Enhertu and won, with some analysts bullishly projecting peak sales that will break $10 billion. And he’s kept many of the promises he had to fire out to investors to keep an unwanted Pfizer takeover at bay in the way back when.

So what’s next?

That’s a question that’s vexing quite a few analysts. AstraZeneca is a restless player and the company takes a lot of chances — which means it racks up a lot of setbacks.

A major initiative aimed at protecting its revenue involves its legal fight against the IRA, which AstraZeneca has so far lost. Its next big ADC with Daiichi Sankyo, Dato-DXd, has sparked a running debate on its potential approval and some analysts have doubted if it can live up to the hype following weak PFS results for the TROP2 ADC. Last summer an early-stage GLP-1 went down in flames, unable to take the heat in a kitchen currently controlled by the commercial chefs at Novo Nordisk and Eli Lilly. Lokelma, picked up in a 2015 buyout, got hit when R&D decided to quash two Phase III studies, denting once-big hopes for blockbuster status. And Soriot has recently been forced to finally give up on one old failure when he finally punted roxadustat’s US rights.

Soriot, though, is a weathered player when it comes to setbacks. Every loss is an opportunity to do better the next time, and no one can be more stubborn. You could see that play out over Covid when its vaccine came in for some undue criticism that blighted its impact in the face of the mRNA stars. That spurred some angry responses as execs dug in. But there was an unexpected upside. The giant didn’t have to readjust as the Covid market went pfffffft.

Their next step: A couple of months ago AstraZeneca touted its new vaccine platform, buying Icosavax for $838 million in cash while contributing an RSV vaccine to the pipeline — a field where GSK has made major headway — and a virus-like particle platform that the company intends to build on.

Volrustomig, a PD-1/CTLA-4 bispecific antibody, has been accelerated into Phase III, with Soriot claiming a leadership spot in bispecifics: “Our portfolio of bispecifics has the potential to replace the first-generation checkpoint inhibitors across a range of cancers.”

And that GLP-1 fail? Last November AstraZeneca paid $185 million to gain a Phase I GLP-1 drug out of China’s Eccogene. And now they’re mapping combo studies with some of their other drugs in a play at creating the next wave of obesity therapies with an edge.

Word in biopharma is that Soriot has been devoting a considerable amount of face time to China, where he committed the company years ago. That’s another one of those market promises that has seen plenty of ups and downs. But Soriot tends to win the big gambles more than he loses, and in this industry, seeing it through can be a major long-term advantage.


6. Pfizer: What the hell happened to the Covid king?

  • R&D spending 2023: $10.57 billion
  • R&D spending 2022: $11.4 billion
  • Change: -7.3%
  • Revenue: $58.5 billion (down 42% from $100.3 billion)
  • R&D as a % of revenue: 18%
  • R&D chief: Mikael Dolsten
  • Ticker: $PFE — down 29% in the past year

The big picture: There was one brief, shining moment — or two — when Pfizer could seemingly do no wrong. It had taken a leading role in breaking through scientific barriers to create a new Covid vaccine in record time, harvested a bumper crop of cash and CEO Albert Bourla was the darling of the world’s favored pharma industry.

That was then.

Now, Bourla and his team are having a tough time convincing Wall Street that the company can do even simple things right. They paid $43 billion to bag Seagen and mount a major new campaign on the cancer front, but its stock has been blighted and the focus turned to cost-cutting as revenue plunged. There was fresh humiliation when Roivant flipped a drug it had grabbed from Pfizer for lunch money and sold it to Roche for $7.1 billion a year later. And Pfizer has lost the narrative in convincing investors it can get back to growth.

That somewhat hapless rep was burnished considerably when Pfizer reported that its first try at an oral GLP-1 obesity drug had flopped. It’s still working to move the dial in the hottest new field in pharma, but so is a long list of rivals. Instead of spurring renewed faith in Pfizer, the obesity play turned into another example of getting it wrong, and the focus at Pfizer shifted squarely to downsizing and cost-cutting in acknowledgment of the new reality that set in.

Bourla, though, is committed to pushing the story that a new period of growth lies ahead. And it’s not proving easy.

At the end of February, Pfizer made its best pitch for oncology, underscoring plans to seize the leadership role in genitourinary and breast cancer while making promises for eight-plus possible blockbusters in the next six years. R&D promises, though, are easy to make and hard to keep. Right now, the clarion call in pharma is “show me the money.”

With Covid and the mRNA revolution forgotten like last season’s hit show, there’s an enormous gap now that will be devilishly hard to bridge. But don’t expect anyone at Pfizer to stop trying anytime soon.


7. Eli Lilly: Built for the long term, Lilly’s day has arrived — and they don’t want to let go

  • R&D spending 2023: $9.31 billion
  • R&D spending 2022: $7.2 billion
  • Change: +30%
  • Revenue: $34.1 billion
  • R&D as a % of revenue: 27%
  • R&D chief: Dan Skovronsky
  • Ticker: $LLY — up 126% in the past year

The big picture: Historically, Eli Lilly has been known as a ponderously slow pharma outfit that often slowly cruised its way into Phase III squalls. But that view is so 2017. In 2024, Lilly has rebranded itself as the Big Pharma engine that could, and did, blow out expectations. And if it’s still not quite as nimble as some analysts might like, its ability to deliver in massively expensive late-stage studies for drugs aimed at big populations has made it a darling of quite the investor crowd.

Lilly, for example, was thwarted at getting an accelerated approval for its Alzheimer’s med, but that didn’t really cut expectations, with blockbuster peak sales projections — even as Biogen/Eisai’s Leqembi suffers from dimming prospects as their high hopes are lowered by the reality of limited sales in the face of limited efficacy.

That pales, though, in comparison to the bright rainbow that’s emerged in obesity. Lilly continues to work up manufacturing capacity to meet demand for its new obesity version of tirzepatide, the GLP-1/GIP drug building up the diabetes franchise, where neither of the two leaders has been able to meet a seemingly limitless demand.

Lilly attracted considerable attention for its vow to build out manufacturing capacity ahead of Phase III data for its next-gen oral version, orforglipron, while clearly so unhappy about Novo’s decision to muscle in and snap up Catalent that CEO Dave Ricks is grousing about the antitrust implications of their rival’s move. Lilly, though, has bragging rights to solid pivotal data in a market that is nowhere close to saturation point.

Like a lot of the big spenders on the list, Eli Lilly has been hunting new immunology drugs and plunked down $2.4 billion for Dice last summer. That was part of a full slate of acquisitions, including a pair of small ADC companies. Following yet another hot trend, there was a $1.4 billion deal for Point, which put them into radiopharmaceuticals.

Lilly nabbed two new drug approvals last year as it waited on the 2 big franchises in obesity and Alzheimer’s. That’s a testament to the progress that Dan Skovronsky spurred after the global player made him R&D chief 6 years ago. Eli Lilly execs still may not always be first, in an industry where first can be tremendously important to commercialization. But they’ve been right where it counts big in drug development, and it will take a therapeutic earthquake to alter that perception anytime in the near term.


8. Bristol Myers Squibb: A rough year spurs a cut in R&D spending and some major late-stage R&D deals

  • R&D spending 2023:  $9.299 billion
  • R&D spending 2022: $9.5 billion
  • Change: -2%
  • Revenue: $45 billion
  • R&D as a % of revenue: 20.6%
  • Development chief: Samit Hirawat; Research chief: Robert Plenge
  • Ticker: $BMY — down 18% in the past year

The big picture:  This is a terrible time to try and explain why your Big Pharma company has structural issues that flattened or eroded sales revenue. Pfizer understands that and Bristol Myers got a bad taste of it as its shares slid 18% in the last year.

In both cases, the CEOs stepped up with a transition plan. The companies did some deals, but the late-stage stuff wasn’t cheap. And in Bristol Myers’ case, a new CEO was able to draw a line between its aging franchises and the new arrivals on the market, which saw some growth. The company line now: Just wait for the big pipeline hits to come and give us some time to weather the decline of these legacy drugs and you’ll love what you see.

Investors may not be cheering, but Bristol Myers’ stock did get some traction out of it in the last few weeks.

It was clear well before 2023 arrived that Bristol Myers understood it was facing some of those dreaded headwinds. That 2% drop in R&D spending highlighted the tight rein on spending for what remains a top 10 player in the pharma R&D world. Major figures in R&D, headed by Rupert Vessey, exited the company — in Vessey’s case, later making the flip to biotech at Flagship. And there was an unusual spat with Dragonfly after the pharma giant walked away from its $650 million investment.

New CEO Chris Boerner spotlighted the immediate strategy at hand: M&A. Mirati and KRAS came their way for $5.8 billion. RayzeBio happily landed a premium on top of the premium they had just scored in an IPO, as Bristol Myers followed rivals into radiopharmaceuticals. The $14 billion Karuna buyout put them into a late-stage race on Alzheimer’s, another R&D category that’s been enjoying a renaissance some years after pharma fled the scene.

Boerner’s bottom line in the Q4 review is that the company will steer more into bolt-on plays — rather than big buyouts — and licensing deals like the SystImmune alliance. That sets the stage for a “transition” period that will last until 2028, four long years ahead, when it’s promising “top-tier” results. It will also be looking at lower-priced competition for Opdivo.

Even before 2028, though, BMS will start losing patent protection on Eliquis. They’ve already begun price negotiations with Medicare. And Eliquis earned $12.2 billion in 2022, making it their number-one franchise. That’s left Bristol Myers and Pfizer, both under huge pressure to perform and do more late-stage deals, backing a full-court press in the courts to keep generics at bay.

Bristol Myers has had an active dealmaking arm for years, including in the wake of its big $74 billion buyout of Celgene, which also delivered Vessey to the pharma giant. That was just five years ago after Celgene had fallen on some troubled times. Celgene had been a standout in the licensing field, known for sampling a wide variety of drug plays in the industry pipeline. One of Bristol’s big failures, though, was ceding the high ground in PD-1 to Merck’s Keytruda, which has been buoying its rival for years. Bristol needs major drug franchises to make a difference in this world, and any future setbacks on the leading drugs it’s been buying now will not be welcome by investors.

There is a path forward for Bristol, of course, even as it vows to pay down debt. But it’s fairly narrow, and this field is known for some treacherous results.


9. GSK: After picking up some badly-needed revenue steam, what’s next for R&D?

  • R&D spending 2023: $7.9 billion (£6.22 billion)
  • R&D spending 2022: $7 billion (£5.5 billion)
  • Change: +13%
  • Revenue: $39 billion (£30.3 billion)
  • R&D as a % of revenue: 20.5%
  • R&D chief: Tony Wood
  • Ticker: $GSK — up 28% in the past year

The big picture: Tony Wood is still shy of his second anniversary as the CSO at GSK, but with an RSV vaccine riding high as a new blockbuster franchise and Shingrix looking every bit the long-distance franchise player GSK needs, he has a reassuring revenue foundation to work with. ViiV’s steady work in HIV — where GSK is a majority owner — also offers a confidence-building revenue stream. And the departure of the consumer unit is well into the rearview mirror now.

Its stock has done well, too, up 28% in the past year.

That’s quite a changed picture from the early days of his predecessor, Hal Barron, who came in with deep oncology experience and a big need to demonstrate a broad-based pipeline reorganization to overcome a well-earned rep for underperformance. Wood’s first moves in R&D were largely defensive, giving up some major alliances — such as a partnership with Adaptimmune — that looked shaky.

GSK has made a lot of early bets, and the risks involved naturally portend that many of its deals won’t survive. You can see that in play right through its recent decision to dump a pair of Vir partnerships in infectious diseases.

In their place, GSK has been inking major new development deals with the likes of China’s Hansoh, for ADCs. Oncology, though, is still only a small performer overall. And it’s been a focus for a while.

GSK spent a billion dollars upfront to bag a mid-stage asthma drug at Aiolos in a rare M&A deal. There was also the $2 billion Bellus buyout last fall, with an eye to creating a new franchise for chronic cough. But there’s been a notable absence of any splashy deals at GSK, with a reorg in research that offers GSK’s latest take on improving efficiency.

We’ll see how that goes.

In the meantime, GSK is doing what it can to stir up some excitement for late-stage drugs like depemokimab (again in asthma), camlipixant (from Bellus) as well as the antibiotic gepotidacin for UTIs/gonorrhea. It’s an uphill fight, though, without much megablockbuster razzmatazz built in. But GSK is a careful player.

After getting stuck with the rep for having one of the worst pipelines in pharma, though, reliable and steady progress with a high-profile launch in RSV will suit just fine. At least for now. It’s likely that investors will keep pressing for something big in Phase III, and that could cost CEO Emma Walmsley a considerable amount of BD money.


10. AbbVie: The slow-motion collapse of Humira keeps them focused on the bottom line while growing R&D spending

  • R&D spending 2023: $7.67 billion
  • R&D spending 2022: $6.51 billion
  • Change: Up 18%
  • Revenue: $54.3 billion
  • R&D as a % of revenue: 14%
  • CMO: Roopal Thakkar
  • Ticker: $ABBV — up 18% in the past year

The big picture: As Rick Gonzalez finishes his final run as CEO, he’s able to look back on a year that saw AbbVie complete its revamp period as the long-awaited — long, long-awaited — arrival of generic Humira bites into its old cash cow.

The great split at Abbott that created AbbVie set up a scenario where the company would pull out every stop to milk Humira for every conceivable dollar possible, delivering mega-returns while Gonzalez became the poster child of patent reform. The bottom line for AbbVie’s team: What’s repeated waves of congressional criticism with the stock price on the line?

Now AbbVie is able to boost expected revenue on the two big drugs developed on Gonzalez’s watch — Skyrizi and Rinvoq — with two new acquisitions to feed future sales projections. The buyout of Botox created a new, highly reliable franchise for AbbVie’s commercial team to lean on.

AbbVie is skilled at acquiring and building revenue. It had its eyes set on the ADC drug Elahere when it acquired ImmunoGen for $10 billion. Initially approved in 2022 for ovarian cancer, the drug is now being positioned for earlier lines of therapy.

Less than a week after the ImmunoGen deal was announced, AbbVie was back for a late-stage acquisition with the $8.7 billion for Cerevel’s neuro play. The deal will bring in clinical-stage assets for schizophrenia, Parkinson’s and dementia, as CNS moves back into a warmer phase in Wall Street circles. Both buyouts underscore Big Pharma’s considerable appetite for new products, with premiums in play for de-risked drug programs.

Gonzalez’s departure barely caused a murmur on the markets, which is a testament to his success in delivering for shareholders a secure, long-term rebuild. His legacy is a company with a ruthless rep for shepherding drug revenue while building a big interest in curtailing patents for pharma. But looking only at the numbers, he proved the winner at the company as the game was played during his tenure.


11. Sanofi: Paul Hudson is still out to make a great first impression in R&D

  • R&D spending 2023: $7.09 billion (6.509 billion euros)
  • R&D spending 2022: $7.08 billion (6.503 billion euros)
  • Change:  flat
  • Revenue: $41.3 billion (37.9 billion euros)
  • R&D as a % of revenue: 17.1%
  • R&D chief: Houman Ashrafian
  • Ticker: $SNY — up 2.8% in the past year

The big picture: When Paul Hudson showed up in San Francisco for JP Morgan in January, ready to talk up plans for the road ahead, he noted: “It feels like a lot longer than four years that we’ve been on this journey.”

But Hudson has always been more comfortable sounding like a newly-coined CEO, plotting a turnaround. And in the last few months, he’s played every card in that deck. The announcement late last year that Sanofi is bumping its R&D budget is central to that theme, though the news of its impact on profitability led to a rout of the stock price. And he delights in spotlighting late-stage assets, even though a slate of his early bets failed or have yet to prove themselves.

In what is now standard in pharma, Hudson made what he could out of the news he was spinning out the consumer division. Again, though, investors were less than thrilled by the gambit.

This time around the PR track, Hudson has boasting rights to the recently approved RSV drug Beyfortus, which comes with some big peak sales projections from Jefferies and much, much less from others. We’ll know soon enough if this is a winner or the latest disappointment at Sanofi. And, as always, there’s the Sanofi touchstone: Its megablockbuster Dupixent, which the pharma giant was able to partner on with Regeneron years ago — keeping the franchise fresh and expanding. Dupixent is the cash cow that gives Sanofi the financial strength needed to move ahead.

And that means there’s capacity for more dealmaking.

Not long after the San Francisco appearance, Hudson followed up on his M&A assurances with a $1.7 billion drug buyout, carving out a Phase II drug for a rare disease called alpha-1 antitrypsin deficiency, or AATD. It fits right into the zone for 2024, where pharma can only get positive attention for something within sight of an approval.

Like others on this list, Sanofi’s R&D rep will ultimately rest on its ability to deliver on the 12 would-be blockbusters the company is betting on. That includes three “products in a pipeline“: amlitelimab, frexalimab and SAR441566 (oral TNFR1si). They’re followed by tolebrutinib, lunsekimig, rilzabrutinib, an anti-TL1A in IBD, an IRAK4 degrader and itepekimab for COPD.

Behind it all, Hudson has also been promising to make Sanofi a leader in AI-assisted pharma operations. Sanofi, though, has been promising a makeover in innovation for well over a decade and has done nothing to prove it’s worked beyond staying on track with the megablockbuster it got from Regeneron. One breakout franchise delivered on Hudson’s watch would change that in a heartbeat.

We’re waiting.


12. Gilead: The CEO gambled on big innovation — and often lost. But the wagers keep coming

  • R&D spending 2023: $5.72 billion
  • R&D spending 2022: $4.98 billion
  • Change: +14.6%
  • Revenue: $27.1 billion
  • R&D as a % of revenue: 21%
  • CMO: Merdad Parsey
  • Ticker: $GILD — down 5.3% over the past year

The big picture: Daniel O’Day jumped into the CEO job at Gilead five years ago and hit the ground running. He hasn’t stopped, even though some of his biggest bets have run into brick walls.

That was apparent weeks ago with the news that Gilead would ice its work on blood cancer involving magrolimab, the CD47 drug picked up in a $5 billion buyout back in 2020. Their mid-stage work on solid tumors ground to a halt shortly after.

Rehashing and refocusing their deal with Arcus, putting in significantly more money while axing one of the Phase IIIs, didn’t help.

Gilead’s rep was built around HIV, where it has remained dominant, though more than a bit taken for granted. The old regime’s follow-up — after a cloudburst of cash for curing hep C that quickly dried up — was to buy out Kite and take a pioneering position in CAR-T, which hasn’t lived up to the financial hype that attended its arrival, despite the clear scientific innovation it brought to the field.

The stock was hammered hard in January after Trodelvy — acquired in the 2020 Immunomedics buyout, which achieved blockbuster status last year — failed a Phase III in second-line lung cancer.

But when you raise doubts and see your stock sinking, counter with a late-stage buyout. That’s clearly what O’Day had in mind when he plunked down more than $4 billion to buy CymaBay after the biotech unveiled late-stage data on seladelpar. Gilead bought a would-be blockbuster with a PDUFA date. And that’s a sign of some desperation at a company that badly needs a breakout.


13. Takeda: Moving up another notch on the top 15, as profitability wobbles, Takeda execs are still reaching for the golden ring in R&D

  • R&D spending 2023: $4.93 billion
  • R&D spending 2022: $4.49 billion
  • Change: +10%
  • Revenue: $29.54 billion
  • R&D as a % of revenue: 17%
  • R&D chief: Andy Plump
  • Ticker: $TAK — down 8.4% in the past year

The big picture: Takeda has been aggressively taking chances in R&D right from the time CEO Christophe Weber and R&D chief Andy Plump teamed up to remake the aging Japanese pharma company into a global drug player back in 2015. That meant steadily upping the ante in R&D — now up another slot in this year’s rankings — and investing in deals like the Shire buyout, which gave Plump his base in the Cambridge/Boston hub, along with a big stake in rare diseases.

For Takeda, that mission meant a broad effort to develop a major pipeline, from collaborations through Phase III. More recently, it’s been about concentrating their new work around a pair of key deals, particularly the $4 billion acquisition of Nimbus’ TYK2. It likely wasn’t much of a surprise, but their drug — which also has a $2 billion rider for milestones — cleared a Phase IIb hurdle in psoriatic arthritis.

For Takeda, it’s a clear indication of just how popular it is these days for pharma players to zero in on late-stage therapies in search of relatively near-term approvals.

Want more evidence of that?

Takeda bet $400 million in cash and more than a billion dollars in milestones to gain rights to Hutchmed’s fruquintinib and then was rewarded with an approval for treatment-naive cases of colorectal cancer in the fall. And they demonstrated its continued appetite in the rare disease space with the recent $300 million deal for Protagonist’s late-stage drug rusfertide, designed to treat a rare blood disease called polycythemia vera (PV).

The risks it’s taken on have been readily apparent to Takeda’s leaders, with its decision to drop Exkivity after flunking the Phase III NSCLC confirmatory trial, a Phase II fail for its key metachromatic leukodystrophy program, as well as a decision to drop Theravance as a partner after a seven-year alliance. The late-stage setbacks cost Takeda a $770 million write-down. Add in a loss of exclusivity for Vyvanse in 2023 — a $3 billion blockbuster in fiscal 2022 — and you have the outlines of unsteady performance for the pharma player, with Weber promising to do better in the near term.

Takeda is unusual in the Big Pharma world for winding up its fiscal year at the end of March. In order to do an apples-to-apples comparison, they prepared a summary of their R&D expenses and revenue for all of 2023 for Endpoints News.


14. Amgen: Capitalizing on a history of striking high-profile deals, Amgen stays in the spotlight

  • R&D spending 2023: $4.8 billion
  • R&D spending 2022: $4.4 billion
  • Change: Up 9%
  • Revenue: $28.2 billion
  • R&D as a % of revenue: 17%
  • R&D chief: Jay Bradner
  • Ticker: $AMGN — up 18% over the last year

The big picture: Amgen is a considerable distance from spending on research like the top 10 players in our R&D 15, but it frequently finds ways to box competitively in the biggest heavyweight category. It had done that with KRAS, taking a legit scientific advance that couldn’t quickly move the dial in a major way on the commercial side. That happens a lot in oncology. And now it’s in the spotlight with an obesity drug — branded as MariTide now — with hopes to take on the likes of Eli Lilly and Novo Nordisk.

The chutzpah originates with longtime CEO Bob Bradway, who has parlayed his Wall Street cred as a former banker at Morgan Stanley into major league status with a savvy understanding of the numbers and investors. He skillfully navigated the $28 billion Horizon buyout last year, bagging a lineup of commercial therapies as the company looks for the approaching patent cliff on Enbrel, a reliable blockbuster that has kept the revenue flowing in.

Amgen may not do a lot in M&A or Phase III, but what it does do, it does with style.

To complete the Horizon deal, Bradway had to orchestrate a deal with the FTC to skirt its objections to price bundling, which essentially leaves the pharma company on commercial probation with regular reporting to the federal agency. That took skill and boldness while maintaining the CEO’s rep for delivering on the bottom line. Its stock is up 18% over the past year.

Analysts will be watching carefully to see how Jay Bradner does in the top R&D post after the Harvard prof-and-former-NIBR chief assumes the seat of David Reese, now chief technology officer. Reese seems truly energized in his new role heading up tech, and Bradner is a die-hard research enthusiast who loves nothing better than jumping into conversations about the details of target degeneration.

Amgen is all about message.


15. Novo Nordisk: The longtime diabetes franchise player has a breakout run going in obesity — with vows to stay in front

  • R&D spending 2023: $4.7 billion (32.4 billion Danish Krone)
  • R&D spending 2022: $3.5 billion (24 billion Danish Krone)
  • Change: 34%
  • Revenue: $22 billion (232.2 billion Danish Krone)
  • R&D as a % of revenue: 14%
  • R&D chief: Marcus Schindler
  • Ticker: $NOVO — up 87% in the past year

The big picture: R&D spending as a percentage of sales has edged up a bit in the last few years, but the key driver here is GLP-1, where Novo has capitalized on its first-in-class leadership position in obesity. After decades spent in the shadow of chronic R&D failure, safety issues and a recent swarm of largely ineffective drugs, the obesity field is crushing it. That has swelled sales revenue as semaglutide glowed, so Novo’s research spending has boomed at a fast pace.

Now that the good times are rolling, and Novo already has a well-earned rep as a realistic and committed player in diabetes, which didn’t come cheap or easy, the new player on the R&D 15 is promising to stay out front — no easy task with Eli Lilly gunning for it. Novo has been snapping up new obesity tech at a furious pace, determined to stay out front.

Its one limiting factor here has been manufacturing capacity. Novo can’t satisfy the demand for a drug that is now a staple of public conversation, as the field gets a boost from a wide range of celebrities, including Oprah Winfrey. That’s marketing you could buy, but don’t have to. It’s coming for free.

With uncharacteristic bravado, Novo doubled down by striking a deal to acquire the global CDMO giant Catalent for $16.5 billion, and Lilly has been fuming about the antitrust aspects as CEO Dave Ricks complains that worldwide manufacturing capacity has either been maxed out or is not easily converted from its existing uses.

Novo’s commitment to growing R&D has international implications that far exceed the limits of its home country of Denmark, extending to hubs in Oxford, Seattle and Beijing. Most recently, Novo has committed to boosting its Boston-area research hub. And it’s likely to remain a key player in its dominant fields — unless some other tech can topple the megablockbuster that is remaking this company.

Novo may be at the end of this list in terms of R&D spending, but it has overachieved with its success for semaglutide. It has the capacity to do more and should continue to climb for several years to come as it makes a case for continued growth.


Postscript: Regeneron, with $4.44 billion in research spending — up 23% over $3.6 billion in 2022 — deserves an honorable mention in the competitive 16th spot. This year, Regeneron expects R&D spending to top up at or close to $5 billion. The company’s value has swollen on the success of its high-profile founders, Len Schleifer and George Yancopoulos, who continue to build the company — hitting a market cap in excess of $100 billion with the stock up 29% over the past year. Regeneron will likely find its way into the top 15 at some point, and we’ll be watching for it.

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Bitcoin on Wheels: The Story of Bitcoinetas

Meet the Bitcoinetas, a fleet of transformative vehicles on a mission to spread the bitcoin message everywhere they go. From Argentina to South Africa,…

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You may have seen that picture of Michael Saylor in a bitcoin-branded van, with a cheerful guy right next to the car door. This one:

Ariel Aguilar and La Bitcoineta European Edition at BTC Prague.

That car is the Bitcoineta European Edition, and the cheerful guy is Ariel Aguilar. Ariel is part of the European Bitcoineta team, and has previously driven another similar car in Argentina. In fact, there are currently five cars around the world that carry the name Bitcoineta (in some cases preceded with the Spanish definite article “La”).

Argentina: the original La Bitcoineta

The story of Bitcoinetas begins with the birth of 'La Bitcoineta' in Argentina, back in 2017. Inspired by the vibrancy of the South American Bitcoin community, the original Bitcoineta was conceived after an annual Latin American Conference (Labitconf), where the visionaries behind it recognized a unique opportunity to promote Bitcoin education in remote areas. Armed with a bright orange Bitcoin-themed exterior and a mission to bridge the gap in financial literacy, La Bitcoineta embarked on a journey to bring awareness of Bitcoin's potential benefits to villages and towns that often remained untouched by mainstream financial education initiatives. Operated by a team of dedicated volunteers, it was more than just a car; it was a symbol of hope and empowerment for those living on the fringes of financial inclusion.

The concept drawing for La Bitcoineta from December 2017.

Ariel was part of that initial Argentinian Bitcoineta team, and spent weeks on the road when the car became a reality. The original dream to bring bitcoin education even to remote areas within Argentina and other South American countries came true, and the La Bitcoineta team took part in dozens of local bitcoin meetups in the subsequent years.

The original La Bitcoineta from Argentina.

One major hiccup came in late 2018, when the car was crashed into while parked in Puerto Madryn. The car was pretty much destroyed, but since the team was possessed by a honey badger spirit, nothing could stop them from keeping true to their mission. It is a testament to the determination and resilience of the Argentinian team that the car was quickly restored and returned on its orange-pilling quest soon after.

Argentinian Bitcoineta after a major accident (no-one got hurt); the car was restored shortly after.

Over the more than 5 years that the Argentinian Bitcoineta has been running, it has traveled more than 80,000 kilometers - and as we’ll see further, it inspired multiple similar initiatives around the world.

Follow La Bitcoineta’s journey:

Twitter: https://twitter.com/labitcoineta

Instagram: https://www.instagram.com/bitcoineta/

El Salvador: Bitcoin Beach

In early 2021, the president of El Salvador passed the Bitcoin Law, making bitcoin legal tender in the country. The Labitconf team decided to celebrate this major step forward in bitcoin adoption by hosting the annual conference in San Salvador, the capital city of El Salvador. And correspondingly, the Argentinian Bitcoineta team made plans for a bold 7000-kilometer road trip to visit the Bitcoin country with the iconic Bitcoin car.

However, it proved to be impossible to cross so many borders separating Argentina and Salvador, since many governments were still imposing travel restrictions due to a Covid pandemic. So two weeks before the November event, the Labitconf team decided to fund a second Bitcoineta directly in El Salvador, as part of the Bitcoin Beach circular economy. Thus the second Bitcoineta was born.

Salvadoran’s Bitcoineta operates in the El Zonte region, where the Bitcoin Beach circular economy is located.

The eye-catching Volkswagen minibus has been donated to the Bitcoin Beach team, which uses the car for the needs of its circular economy based in El Zonte.

Follow Bitcoin Beach:

Twitter: https://twitter.com/Bitcoinbeach

South Africa: Bitcoin Ekasi

Late 2021 saw one other major development in terms of grassroots bitcoin adoption. On the other side of the planet, in South Africa, Hermann Vivier initiated the Bitcoin Ekasi project. “Ekasi” is a colloquial term for a township, and a township in the South African context is an underdeveloped urban area with a predominantly black population, a remnant of the segregationist apartheid regime. Bitcoin Ekasi emerged as an attempt to introduce bitcoin into the economy of the JCC Camp township located in Mossel Bay, and has gained a lot of success on that front.

Bitcoin Ekasi was in large part inspired by the success of the Bitcoin Beach circular economy back in El Salvador, and the respect was mutual. The Bitcoin Beach team thus decided to pass on the favor they received from the Argentinian Bitcoineta team, and provided funds to Bitcoin Ekasi for them to build a Bitcoineta of their own.

Bitcoin Ekasi’s Bitcoineta as seen at the Adopting Bitcoin Cape Town conference.
Bitcoin Ekasi’s Bitcoineta as seen at the Adopting Bitcoin Cape Town conference. Hermann Vivier is seen in the background.
South African Bitcoineta serves the needs of Bitcoin Ekasi, a local bitcoin circular economy in the JCC Camp township.

Bitcoin Ekasi emerged as a sister organization of Surfer Kids, a non-profit organization with a mission to empower marginalized youths through surfing. The Ekasi Bitcoineta thus partially serves as a means to get the kids to visit various surfer competitions in South Africa. A major highlight in this regard was when the kids got to meet Jordy Smith, one of the most successful South African surfers worldwide.

Coincidentally, South African surfers present an intriguing demographic for understanding Bitcoin due to their unique circumstances and needs. To make it as a professional surfer, the athletes need to attend competitions abroad; but since South Africa has tight currency controls in place, it is often a headache to send money abroad for travel and competition expenses. The borderless nature of Bitcoin offers a solution to these constraints, providing surfers with an alternative means of moving funds across borders without any obstacles.

Photo taken at the South African Junior Surfing Championships 2023. Back row, left to right:

Mbasa, Chuma, Jordy Smith, Sandiso. Front, left to right: Owethu, Sibulele.

To find out more about Bitcoineta South Africa and the non-profit endeavors it serves, watch Lekker Feeling, a documentary by Aubrey Strobel:

Follow Bitcoin Ekasi:

Twitter: https://twitter.com/BitcoinEkasi

Fundraiser: https://support.bitcoinekasi.com/

Europe: Bitcoineta Europa

The European Bitcoineta started its journey in early 2023, with Ariel Aguilar being one of the main catalysts behind the idea. Unlike its predecessors in El Salvador and South Africa, the European Bitcoineta was not funded by a previous team but instead secured support from individual donors, reflecting a grassroots approach to spreading financial literacy.

European Bitcoineta sports a hard-to-overlook bitcoin logo along with the message “Bitcoin is Work. Bitcoin is Time. Bitcoin is Hope.”

The European Bitcoineta is a Mercedes box van adorned with a prominent Bitcoin logo and inspiring messages, and serves as a mobile hub for education and discussion at numerous European Bitcoin conferences and local meetups. Inside its spacious interior, both notable bitcoiners and bitcoin plebs share their insights on the walls, fostering a sense of camaraderie and collaboration.

Inside the European Bitcoineta, one can find the wall of fame, where visitors can read messages from prominent bitcoiners such as Michael Saylor, Uncle Rockstar, Javier Bastardo, Hodlonaut, and many others.
On the “pleb wall”, any bitcoiner can share their message (as long as space permits).

Follow Bitcoineta Europa’s journey:

Twitter: https://twitter.com/BitcoinetaEU

Instagram: https://www.instagram.com/bitcoinetaeu/

Ghana: Bitcoineta West Africa

Embed: https://youtu.be/8oWgIU17aIY?si=hrsKmMIA7lI6jX4k

Introduced in December 2023 at the Africa Bitcoin Conference in Ghana, the fifth Bitcoineta was donated to the Ghanaian Bitcoin Cowries educational initiative as part of the Trezor Academy program.

Bitcoineta West Africa was launched in December 2023 at the Africa Bitcoin Conference. Among its elements, it bears the motto of the Trezor Academy initiative: Bitcoin. Education. Freedom.

Bitcoineta West Africa was funded by the proceeds from the bitcoin-only limited edition Trezor device, which was sold out within one day of its launch at the Bitcoin Amsterdam conference.

With plans for an extensive tour spanning Ghana, Togo, Benin, Nigeria, and potentially other countries within the ECOWAS political and economic union, Bitcoineta West Africa embodies the spirit of collaboration and solidarity in driving Bitcoin adoption and financial inclusion throughout the Global South.

Bitcoineta West Africa surrounded by a group of enthusiastic bitcoiners at the Black Star Square, Accra, Ghana.

Follow Bitcoineta West Africa’s journey:

Twitter: https://twitter.com/BitcoinetaWA

Instagram: https://www.instagram.com/bitcoinetawa/

All the Bitcoineta cars around the world share one overarching mission: to empower their local communities through bitcoin education, and thus improve the lives of common people that might have a strong need for bitcoin without being currently aware of such need. As they continue to traverse borders and break down barriers, Bitcoinetas serve as a reminder of the power of grassroots initiatives and the importance of financial education in shaping a more inclusive future. The tradition of Bitcoinetas will continue to flourish, and in the years to come we will hopefully encounter a brazenly decorated bitcoin car everywhere we go.

If the inspiring stories of Bitcoinetas have ignited a passion within you to make a difference in your community, we encourage you to take action! Reach out to one of the existing Bitcoineta teams for guidance, support, and inspiration on how to start your own initiative. Whether you're interested in spreading Bitcoin education, promoting financial literacy, or fostering empowerment in underserved areas, the Bitcoineta community is here to help you every step of the way. Together, we will orange pill the world!

This is a guest post by Josef Tetek. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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