It only makes sense that Big Pharma would be associated with some big numbers. The size and reach of the major biopharmaceutical companies is pretty impressive (or scary, depending on your point of view). However, there are also some statistics for Big Pharma that aren't all that large but are intriguing nonetheless. Here are a dozen Big Pharma numbers -- small and large -- that might surprise you.
1. $1.05 trillion
That's the total revenue of the global pharmaceutical market. To put that number in perspective, it's roughly one-quarter of what the U.S. federal government will spend in 2016.
2. $515 billion
Of the $1.05 trillion revenue for the global pharmaceutical market, nearly half of it -- roughly $515 billion -- comes from the U.S. and Canada. However, the two countries make up only around 7% of the total world population.
This is the 2015 profit margin that Forbes estimated for the healthcare technology industry, making it by far the most profitable industry of all, with major and generic pharmaceutical companies leading the way. The company really setting the pace is Gilead Sciences (NASDAQ:GILD), which has a profit margin of nearly 53% over the last 12 months.
The average stock return over the last 10 years for the 10 biggest pharmaceutical companies based on 2015 sales is 88%. However, this statistic is skewed by the huge returns of over 480% during the period for Gilead. Excluding the big biotech, stock returns for the other big 10 biopharmaceutical companies averaged 44% -- well below the 73% returns achieved by the S&P 500 index.
5. $58.8 billion
Members of the Pharmaceutical Research and Manufacturers of America (PhRMA) invested a combined $58.8 billion in research and development during 2015, up from $53.3 billion the previous year. According to the National Science Foundation, the biopharmaceutical industry accounted for 21% of all U.S. business research and development spending in 2011. The second-highest industry, software, accounted for 11% of R&D spending.
Where does all that R&D spending go? Over 7,000 drugs are currently in development around the world. That number includes 1,813 cancer drugs and 1,329 neurological disorder drugs. Around 70% of the overall total of drugs in development are potential first-in-class medicines.
This number of drugs approved by the FDA last year might not seem like a big deal at first glance. However, it's the second-highest total in at least 35 years. The only year where more drugs were approved by the FDA in recent history was 1996, with 53 approvals. Nearly half of the drugs approved in 2015 were for rare diseases.
8. $2.6 billion
Developing a new drug costs pharmaceutical companies around $2.6 billion on average. That figure includes the costs associated with drug failures. By comparison, the average cost to develop a drug in the 1980s was around $413 million.
Less than 12% of drugs that make it to clinical trials ultimately win regulatory approval. For some indications, the odds are even lower. Between 1998 and 2014, pharmaceutical companies attempted to develop 123 Alzheimer's disease drugs. Only four won approval.
10. $5.2 billion
Nielson estimated that $5.2 billion was spent on prescription drug advertising in 2015. The largest chunk of that amount was for television advertising. Two drugs in particular were promoted on TV the most. AbbVie (NYSE:ABBV) spent $357 million last year in TV ads for Humira. Pfizer (NYSE:PFE) wasn't far behind, shelling out $328 million on commercials promoting Lyrica.
The biopharmaceutical industry directly employs 854,000 people in the U.S. When you count indirect jobs for suppliers and vendors to the industry plus induced jobs from additional economic activity, the industry supports an estimated 4.4 million jobs.
12. 64.2 billion
Talk about the patent cliff has subsided, but the reality is that Big Pharma still faces a patent cliff. From 2016 through 2018, drugs with pre-expiry value totaling a combined $64.2 billion will face generic competition. Among them are top-selling drugs like AbbVie's Humira and Pfizer's Lyrica.
If you buy a dozen doughnuts, the doughnut shop usually throws in one for free. I like that baker's dozen approach (mainly because I like doughnuts), so here's an extra Big Pharma statistic that might make your jaw drop: In 2013, biopharmaceutical companies led all other industries in corporate giving by donating 19.4% of pre-tax profits to charitable organizations.
You probably won't be surprised, though, that 90% of the contributions came in the form of in-kind product donations. High list prices for certain drugs can add up to some major bucks quickly. Still, it's nice to know that the frequently vilified Big Pharma companies aren't as heartless as they're sometimes portrayed.