Ranking world pharmaceutical companies at top1000 by 2020

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As the world looks to the pharmaceutical industry to develop a vaccine to end the epidemic caused by the novel coronavirus, global investment bank Torreya has published an interesting report on the valuation rankings of the world's 1,000 pharmaceutical companies.

The Global 1000 Pharmaceutical Report aims to provide insight into the global scale of the pharmaceutical industry and its extraordinary growth over the years. Torreya had identified and started tracking about 30,000 pharmaceutical companies in 2012. However, more than half of these selected companies are not listed on the stock market. Therefore, Torreya specifically developed a method to estimate the valuation of private private companies using the algorithm of valuation multiplier of public companies.
Every company included in Torreya's statistics must be a company focused on producing and selling qualified drugs. The report excludes OTC drug companies, drug distributors, pure industrial manufacturers and API manufacturers.

Torreya's report highlights that pharmaceuticals is the world's third largest industry after finance and e-commerce, based on a comparison of the total value of the publicly traded portion of all major industries.
Torreya expects global revenue for compliant pharmaceutical companies to be $1.24 trillion in 2020. However, in value terms, the world's pharmaceutical companies are valued at $6.65tn, a threefold increase since 2003. Of that $6.65 trillion valuation, $5.65 trillion is related to public companies.
Moreover, the market value of the 35 most valuable pharmaceutical companies has more than doubled in nine years, from $1.6 trillion in 2011 to $3.6 trillion in 2020.

The pharmaceutical industry has been democratised since 2003, the report says. While Big Pharma is growing, the rest of the industry is growing even faster. The fastest growing sectors include Chinese pharmaceuticals, branded pharmaceuticals, animal medicine and biotechnology.
The top five branded pharmaceutical companies were Roche, Janssen, Pfizer, Abbott Laboratories and Merck. There has also been a slight increase in the number of biologics focused companies in the Pharmaceutical 1000, and the valuation share of biologics companies has risen sharply over the past 17 years. This reflects the growing importance of these drugs in the market.
Biologics, blood products and vaccines are the fastest growing areas. New areas such as gene therapy and nucleic acid are also developing rapidly, but are still relatively small. The top five countries in the pharmaceutical industry are the US, China, Switzerland, Japan and the UK, but the US and China alone account for more than half of the industry's value.

The top nine biotech regions are San Francisco, Boston, San Diego, New York, Denmark, the Rhine region, Jiangsu province, South Korea and Washington, D.C., the report said. Of those nine, a third of their business value is in San Francisco and Boston. Other key insights include that more than half of the biotech industry's value is in the United States, followed by China.
In addition, 38% of the total biotech valuation relates to new therapies for oncology. Rare disease and central nervous system (CNS) pharmaceutical companies accounted for another 25% of their value. Together with hematology and virology, the top five therapeutic areas account for more than two-thirds of all biotech valuations.

The Torreya report explores hundreds of impressive value creation stories from the pharmaceutical industry. It lists five leading examples of exceptional value creation in the industry. Since 2003, J&J has created more than $240 billion in value, making it the "Global Value Champion" in the "Big Pharma" category. In addition, China's Hengrui Pharma in the "branded pharmaceuticals" category, India's Sun Pharma in the "generic pharmaceuticals" category and Royalty Pharma in the "biopharmaceutical" category are the global value champions in this category.

Torreya's report comments on how private equity (PE) investors are playing an increasingly important role in the biopharmaceutical industry, with royalty investments at an all-time high, with an estimated $15 billion recently raised for royalty investment strategies.
In their list of the top 10 most active private equity investors in commercial medicine, based on the number of deals, Stale Capital and Avista are the biggest investors, while Royalty Pharma, Adimab and Halozyme are the most popular investors.

If the pharmaceutical industry were compared to a country, it would rank 15th in the world, bigger than the gross domestic product of Mexico, Indonesia, Sweden or Poland, according to the report. While such comparisons are open to debate, there is no denying the fact that the pharmaceutical industry is a large and growing part of the global economy. Given that the market value of the most successful pharmaceutical companies is only likely to grow as the global burden of disease increases, Leming believes the industry will only grow in size and become a larger share of the global economy.

The resources：
Torreya website，《The Pharma 1000: The World’s Most Valuable Pharmaceutical Companies》
Download Address:
https://torreya.com/publications/pharma1000-report-torreya-sept2020.pdf

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