“Patients and families are going to be very unhappy if they learn that drug companies spent the last three months profiteering and not following through on their R&D rhetoric”

FLASHBACKReuters: “Novavax executives could get big payday even if vaccine fails”…CBS: “Moderna executives hiked their stock sales after announcing positive vaccine trial”

Washington, DC – Today, in advance of drug company earnings calls this week, Patients Over Pharma released the following statement and background highlighting that while major drug companies have been trying to rehabilitate their image by claiming to be investing heavily in R&D, what we saw in the first three months of the pandemic underscores how much further they would have needed to go in the second quarter for that to be anywhere close to reality.

“Drug companies spent the first few months of the year trying to have their cake and eat it too by talking about their commitment to COVID-19 response while prioritizing spending on sales, marketing, executive pay, and stock buybacks,” said Eli Zupnick, spokesman for Patients Over Pharma. “Taxpayers are now pouring billions of dollars into drug companies to support their COVID-19 vaccine and treatment development, so patients and families are going to be very unhappy if they learn that drug companies continued to spend the last three months profiteering and not following through on their R&D rhetoric.”

In the first quarter of 2020, the listed drug companies generally reduced their R&D spending compared to 2019 while increasing sales and marketing and sending billions of dollars to executives and shareholders.

Upcoming earnings calls

Pfizer: 7/28/20
Sanofi: 7/29/20
AstraZeneca: 7/30/20
Eli Lilly: 7/30/20
Emergent Biosolutions: 7/30/20
Gilead: 7/30/20
Merck: 7/31/20
Moderna: 8/5/20
Regeneron: 8/5/20
Novavax: 8/11/20

Background from Q1 2020 drug company earnings reports 

2019 Annual Reports

Gilead Increased Its Sales Spending By More Than Its R+D Spending In First Quarter Of 2020. In the first quarter of 2020, Gilead reported spending $1.101B on research and development and $1.076B on sales, general and administrative costs. In comparison, in the same period in 2019, they spent $1.057B on research and development and $1.030B on sales, general and administrative. The increase for R+D was $44M to S,G+A’s $46M increase. [Gilead press release, 4/30/20]Gilead Attributed Higher Sales, General + Administrative Spending In Q1 Of 2020 To “Higher Promotional Expenses In The United States.” “SG&A expenses and non-GAAP SG&A expenses increased primarily due to higher promotional expenses in the United States.” [Gilead press release, 4/30/20]

Gilead Increased R+D Spending On Remdesivir By Just $50M In Q1 Of 2020. “R&D expenses and non-GAAP R&D expenses increased primarily due to Gilead’s ramp up of remdesivir, an investigational antiviral for the treatment of COVID-19, including approximately $50 million of manufacturing scale-up and clinical trial costs, partially offset by lower clinical trial expenses as a result of Gilead’s pause or postponement of other clinical trials resulting from the pandemic.” [Gilead press release, 4/30/20]

Gilead Paid Out $874M In Cash Dividends To Shareholders And Made $1.3B In Stock Buybacks In First Quarter Of 2020. “As of March 31, 2020, Gilead had $24.3 billion of cash, cash equivalents and marketable debt securities, compared to $25.8 billion as of December 31, 2019. During the first quarter 2020, Gilead generated $1.4 billion in operating cash flow, repaid $500 million of debt, paid cash dividends of $874 million and utilized $1.3 billion on stock repurchases.” [Gilead press release, 4/30/20]

Gilead Confirmed It Would Offer A Cash Dividend To Shareholders In Q2 Of 2020. [Gilead press release, 4/30/20]


Moderna Spent Less On R&D Expenses In Q1 2020 Than It Did In Q1 2019. “Research and development expenses were $115.1 million for the three months ended March 31, 2020 compared to $130.4 million for the three months ended March 31, 2019. The decrease was primarily attributable to decreases in lab supplies and materials, clinical trial and manufacturing costs, consulting and outside services, partially offset by increases in personnel related costs, depreciation and amortization and stock-based compensation.” [Moderna press release, 5/7/20]

Johnson & Johnson

Johnson & Johnson: Research & Development Budget For First Quarter Of 2020 Nearly 10% Lower Less Than First Quarter Of 2019. According to their 2020 Q1 earnings press release, Johnson & Johnson spent 9.7% less on research & development in the first quarter of 2020 versus 2019. “We continue to invest in research and development and competitive levels, investing 12.5% of sales this quarter. This was lower than the first quarter 2019 by 180 basis points , driven by timing of Pharmaceutical milestone payments, partially offset by increased investment in robotics and digital solutions in the Medical Devices business.” [Johnson & Johnson Q1 2020 Earnings Call, 4/14/20]

J&J Announced It Would Increase Its Quarterly Shareholder Dividend By 6.3%. “Johnson & Johnson (NYSE: JNJ) today announced results for first-quarter 2020. The Company also announced earlier today that its Board of Directors declared a 6.3% increase in the quarterly dividend rate, from $0.95 per share to $1.01 per share. At the new rate, the indicated dividend on an annual basis is $4.04 per share compared to the previous rate of $3.80 per share.” [Johnson & Johnson press release, 4/14/20]

Emergent BioSolutions

Emergent Spent 7% Less On R&D In Q1 2020 Than It Did In Q1 2019. “For Q1 2020, gross R&D expenses were $42.7 million, a decrease of $3.4 million or 7% as compared to 2019. The decrease primarily reflects a decline of costs associated with the Company’s FLU-IGIV product candidate.” [Emergent Biosolutions press release, 4/30/20]

Emergent Forecast Revenue Between $270-300 Million In Q2 2020. [Emergent Biosolutions press release, 4/30/20]

Eli Lilly 

Eli Lilly Expected Annual R&D Expenses Would Not Increase From Projections At Beginning Of Year. “The company still anticipates 2020 revenue between $23.7 billion and $24.2 billion.  . . . Research and development expenses are still expected to be in the range of $5.6 billion to $5.9 billion.” [Eli Lilly Q1 2020 press release, 4/23/20]

Eli Lilly Announced An Additional $250 Million In Profits In First Quarter Of 2020 As Result Of Pandemic. “In the first quarter of 2020, worldwide revenue was $5.860 billion, an increase of 15 percent compared with the first quarter of 2019. The increase in revenue was driven by a 22 percent increase due to volume, partially offset by a 6 percent decrease due to lower realized prices. The company estimates worldwide volume growth in the first quarter of 2020 was favorably impacted by increased customer buying patterns and patient prescription trends resulting from the COVID-19 pandemic that increased worldwide revenue by approximately $250 million.” [Eli Lilly Q1 2020 press release, 4/23/20]


Merck Pharmaceutical Sales Increased In Q1 2020 By 10% To $10.7B. “First-quarter pharmaceutical sales increased 10% to $10.7 billion, excluding the unfavorable effect from foreign exchange, sales grew 12%. The increase was driven primarily by growth in oncology and vaccines, partially offset by the ongoing impacts of the loss of market exclusivity for several products.” [Merck press release, 4/28/20]


Novavax Reported 52% Decrease In R&D Expenses In 2020 Q1 Versus 2019 Q1. “Research and development expenses decreased 52% to $16.9 million in the first quarter of 2020, compared to $35.5 million in the same period in 2019. This decrease was primarily due to decreased development activities of ResVax, lower employee-related costs and other cost savings due to the Catalent transaction in 2019.” [Novavax press release, 5/11/20]


Pfizer Increased R&D Expenses By $500 Million For Full Year 2020 To Account For “Incremental” Investment In Coronavirus Work. “Guidance range for Adjusted R&D expenses(3) was increased by $500 million to a range of $8.6 to $9.0 billion, solely to reflect incremental investments Pfizer anticipates making in 2020 to combat the COVID-19 pandemic, including development of potential anti-viral treatments and a potential vaccine, as well as the evaluation of existing Pfizer medicines, which are the subject of novel research projects for investigation in COVID-19 patients.” [Pfizer Q1 2020 press release, 4/28/20]

Pfizer Distributed $2.1 Billion In Shareholder Dividends In First Three Months Of 2020. “During the first three months of 2020, Pfizer paid $2.1 billion of dividends, or $0.38 per share of common stock.” [Pfizer Q1 2020 press release, 4/28/20]


Regeneron Reported 33% Increase In Revenue To $1.8 Billion In Q1 2020. “Total revenues increased by 33% to $1.828 billion in the first quarter of 2020, compared to $1.373 billion in the first quarter of 2019.” [Regeneron press release, 5/5/20]


Sanofi Reported Q1 Sales Up By 6.9%. “In the first quarter of 2020, Company sales were €8,973 million, up 6.9% on a reported basis. Exchange rate movements had a positive effect of 0.3 percentage points, mainly driven by the strength of the U.S. dollar and the Japanese yen, partially offset by the decrease in the Brazilian real and the Argentine peso. At CER, Company sales increased 6.6%.” [Sanofi press release, 4/24/20]

Sanofi Decreased R&D Spending In Q1 2020 Versus Q1 2019 By 3.2%. “Research and Development (R&D) expenses decreased 3.2% to €1,340 million in the first quarter of 2020. At CER, R&D expenses decreased 4.3% reflecting smart spending initiatives as well as a decline in Diabetes R&D expenses. In the first quarter, the ratio of R&D to sales decreased 1.6 percentage points to 14.9% compared to the first quarter of 2019.” [Sanofi press release, 4/24/20]

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