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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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November 26, 2013

The Freshness Index

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Posted by Derek

One way to look at a drug company's pipeline and portfolio is the "Freshness Index" - how much of its sales are coming from products approved within the past five years. Here's Bernard Munos earlier this year on this topic, where he shows that (too much) revenue lately has been coming from older products. At the time, the figures for the big companies started off with Novartis (19% "fresh" sales), GlaxoSmithKline (12%), J&J (11.8%) and Pfizer (10%).

I bring this up because there's a new look at the freshness index. This one has only products from 2010 or later, and year-to-date sales figures. Under those conditions, it's J&J in the lead (23.4% of sales), then Novartis (17.8%), and Novo Nordisk (13.6%). Now, Novo was not in Munos's list, so I can't say if there's been much of a change there or not, but I find the change in J&J's figures interesting. I don't think that's all due to new approvals - is it older stuff slipping off the list? The new list also has GSK down neat the bottom at 2.3% "fresh", which shows you how much the cutoffs matter to these assessments.

One thing both lists agree on, though, is Eli Lilly. They're at the bottom in both, showing 0.8% of their sales coming from anything approved since 2010. That can't be good, and it isn't. AstraZeneca, Pfizer, Merck, and Sanofi are all in the single digits as well. So's Roche, but their long-running Genentech-driven biotech products make up for that. AZ and Lilly don't exactly have that cushion.

Comments (21) + TrackBacks (0) | Category: Business and Markets


1. Anon8 on November 26, 2013 2:01 PM writes...

I see that Merck is placed at 2.8%, not good. The only good news for Merck is that Lilly is at the rock bottom. We can all agree that it is a good indicator.

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2. Anonymous on November 26, 2013 2:12 PM writes...

I assume many of these "new products" are me-too variants and/or line extensions, it would be nice to see the stats for first-in-class NMEs only, split by internally vs externally sourced.

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3. MTK on November 26, 2013 3:00 PM writes...

The freshness index here is just a snapshot. Probably not a bad one but one probably needs to examine the trends and also the remaining patent life on each of the "fresh" assets to get an overall trend.

Just eyeballing the quarterly growth which may be too short of a timespan, but Bayer looks like it's getting fresher faster than the others.

Lilly is not only "stale", but not getting appreciably "fresher". Not a good combo.

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4. RAM on November 26, 2013 4:12 PM writes...

As long as J&J keeps selling Listerine they should keep the top spot on any Freshness Index.

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5. Anonymous on November 26, 2013 5:03 PM writes...

The game's up, I'm afraid. Such a pity.

Are there many cases, historically, of a science-and-technology industry providing plenty of jobs that are both intellectually interesting and well rewarded for more than, say, three generations of engineers/scientists?

I suppose electric power generation and distribution did. Perhaps railways? Petrochemicals didn't, nor nuclear power. Oil refining did. Perhaps the old inorganic and organic chemical industries did?

Will computers and electronics - perhaps if you start from valve radios in the 1920s we're there already. Or if you start from the electric telegraph, we've been there for ages. But was there a continuity of such jobs?

The trouble is, it's impossible for the bright eighteen year old to guess - so how is he to pick a career? No wonder people go for the law or medicine, though plenty of lawyers may live to regret their choice. Is even vet med immune to these difficulties: will people spend on cats and dogs forever?

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6. Ken Frazier on November 26, 2013 5:17 PM writes...

Freshness Index? Who gives a crap about that? I can always layoff the worker bees to make the books look good. Need to keep those with British accents who always tickle my innards though.

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7. Anonymous on November 26, 2013 5:17 PM writes...

@5: Choose law: People will always fight over each other's money, property, etc.

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8. Anon tired of pharma crap on November 26, 2013 5:25 PM writes...

#4 - If J&J truly sells a lot iof new listerine products, kudos to them for finding ethical ways to make new revenue. This is one of the few big pharma companies that I still admire. The consumer products division is performing well (yes, I know that they had a fair share of issues), and novel drugs division is beating out the more established peers such as Jerk, Pfsucker, Willy and GSK pretty handily.

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9. Anonymous on November 26, 2013 5:44 PM writes...

You want to know about freshness? I'll tell you. The entire industry stinks of stale farts trapped in a coffin.

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10. SteveM on November 26, 2013 6:02 PM writes...

It would be interesting to see Big Pharma CEO compensation plotted as a function of the "Freshness Index".

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11. M on November 26, 2013 8:47 PM writes...

J&J is at the top of this list because of abiraterone, rivaroxaban, telaprevir, canagliflozin, etc. All are in-licensed products, rather than internally discovered drugs. With J&J continuing in cutting internal drug discovery, that's the only future they have.

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12. dearieme on November 27, 2013 6:08 AM writes...

@5: aeronautics and motor car engineering are others. I suppose the difference is that pharma has to keep discovering new wonders whereas many of those other trades can make do by marginal improvements on existing technology.

Perhaps software-writing will be like that: if you don't keep inventing new googles or facebooks or whatever, you perish, or at least become an ultra-humdrum business.

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13. simpl on November 27, 2013 8:29 AM writes...

This "freshness" idea is really for financial analysts trying to get a picture of a company's portfolio. Companies try to communicate them, but all use the most flattering best-before date, so a neutral comparison is a step forward. It is not a KPI, any more than Lipinski's rules are, and there would be little point in riding the brand-sale merry-go-round just to improve "freshness".
In Oncology and Biotech, the model should perhaps be different too, as one compound expands indications over time, Also, speed of worldwide penetration is relevant.
In any event, for people in R&D, the better parameters would be number of compounds in the clinic, and their drop-out rate.

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14. Anonymous on November 27, 2013 9:38 AM writes...

@11: Their in-licensing has been more fruitful than most big pharma/medium-size pharma discovery efforts. They have made very smart licensing deals (e.g. ibrutinib). Thats why they have a rosy future and many pharma do not. I think you are seeing the future there..many big pharmas will phase out discovery because they are not good at it and do what they are good at, late-stage development/marketing. R (of RnD) will come from small companies and to some extent academics. Why are J/J, Celgene, Gilead in such good shape? They have followed this model, of course Gilead does do a decent amount of their (very focused) R/D. The focus is smart too. Too many big pharma try to do too much. Focusing is really key.

Unfortunately too, if you want to kill innovation, try to do it in a large organization. Too many committees, too many agendas, too many people to kill what appear as risky, but in the end successful and game-changing programs. If academia could really get their act together, they could make a big impact since they wont be afraid to try something risky (its what some of them do) and they are not fearful of losing their job with one misstep, unlike pharma today which just breeds risk aversion and maintenance of status quo. One thing is sure, the industry will look very different 10 years from now, even then it does today.

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15. M on November 27, 2013 12:15 PM writes...

@14 Yes, we're on the same page. You say, "many big pharmas will phase out discovery because they are not good at it and do what they are good at, late-stage development/marketing". I agree that is the future of big pharma - all the big companies may not get there at the same pace, but it is hard to see any future other than one where nearly all of drug discovery is done in small companies and nearly all of late-stage development/marketing/sales are done by the big companies.

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16. CMCguy on November 27, 2013 3:38 PM writes...

#14 & #15 although you be be correct that pharma industry is going in direction of bifurcation do you think such a model will achieve more innovation, by faster and less expensive means? Typically R&D of a drug is hard enough to manage and oversee in any organization large or small and if they are further apart, particularly under different entities in increases the issues that have to be addressed. Your model suggests industry would probably end up as generic companies collecting profits because unlikely investors would wish to foot the bill for innovation.

I cringe at academia/NIH claims for drug discovery programs and although they can play a role in terms of getting their act together I am uncertain most even known what the play is (likely will end up as a tragedy akin to most development programs now). Big pharma for the most part has gotten too big and profit centric where lost focus to mission of medicines and heart of R&D so perhaps what is needed is more small and medium sized organizations which have concrete aims, breadth of know how and critical mass to progress if indeed want new drugs.

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17. Anonymous on November 27, 2013 3:57 PM writes...


I also am scared of the government trying to make therapeutics. They cant even make a website. I have more hope for some academic efforts. They can be good at identifying novel targets and maybe generating good leads. The IND-enabling studies are not rocket science and their are many consultants out there now to help. I agree, small companies could be helpful here too.

Well, I dont think the innovation will come from pharma, so it has to come from somewhere. R/D is not that hard to manage. It is when there are too many managers, however. No, industry (big pharma) does what its good at late stage development (after phase IIb) and marketing.

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18. Anonymous on November 28, 2013 3:23 AM writes...

@17: Biotech and academia can be just as conventional (narrow-minded) and censercative (risk-averse) as big pharma, if not more so. Academic grant funding bodies and VCs tend to look for safe, low-risk investments and so academics and biotechs either play along with curent fads and trends, or risk getting left in the cold without funding. But unlike big pharma, they have only one project which must succeed, rather than a large portfolio that can absorb more failures. So the grass always seems greener on the other side, but it isn't; the entire industry is limited by the diminishing returns of target-based discovery, and so a completely new approach is needed.

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19. Anon tired of pharma crap on November 28, 2013 12:46 PM writes...

#17 - The govt that you think is incompetent put a man on the moon, conceived and built an amazing set of highways, laid the foundation for the WWW for starters. The problem with the Obamacare website was that it was outsourced - to the same cesspit of mismanaged private industry that is infecting this country. Private industry right now serves only two interest groups - management and Wall Street that makes money out of short term trades. Its fine to drink tea, just don't let it get to your head.

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20. Bonnie on November 29, 2013 1:07 AM writes...

I have yet to work in an academic drug discovery group whose sole purpose wasn't to publish, publish, publish. Academic research is stifled by an environment of publish or perish. Compounds are rushed through synthesis and testing just in time to be sold off to the publishing company, at which point, the researcher moves on to the next molecule for another publication without a second glance at the previous one. A huge amount of projects are half baked and poorly understood. The system is caving under pressure to maintain 'excellent' publication records in order to secure funding for the next 'hot topic'. Im losing faith with academic research. The system needs an over-haul.

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21. AnonAnon on December 1, 2013 3:39 PM writes...

Unfortunately, all the government "success" stories were contrived by scientists/engineers of a much different era. Even the WWW underpinnings started as a DARPA project to connect computers. The ObamaCare website was doomed simply because it was shipped off to cronies who couldn't deliver (they had already failed in Canada!).

We don't have a government agency (NIH, NCI, NSF etc.) that is capable of funding outstanding novel ideas. They all want to fund projects that are more established.

Bottom line: No one wants to pay for anything and very few want to take the risk to try to develop something as complicated as a new medicine.

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