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30 pharmaceutical and health companies on the 2024 Fortune Global 500 list. Source: Fortune Chinese website

The 2024 Fortune Global 500 list was announced, with 30 pharmaceutical and health companies on the list. The United States, like last year, occupies 19 seats. Because the pharmaceutical company Eli Lilly replaced Danaher, which does diagnostic business, on the list again, the number of American companies on the list remains the same as last year, and continues to maintain an absolute leading advantage.

Another old innovative force, the European power, should not be underestimated. With two European companies out of the game, half of the 14 pharmaceutical companies on the list are still from Europe. Among the top 50 most profitable companies, two seats are occupied by pharmaceutical companies, one of which is Johnson & Johnson of the United States and the other is Novartis of Switzerland.

Excluding China Resources Co., Ltd. (No. 72, including China Resources Pharmaceutical), there are three Chinese companies on the list this time, the same as last year, namely China National Pharmaceutical Group Co., Ltd. (No. 112), Shanghai Pharmaceutical Group Co., Ltd. (No. 411), and Guangzhou Pharmaceutical Group Co., Ltd. (No. 417). Their rankings have risen by 1, 27, and 9 places respectively compared with the previous year.

01/

Faced with strong challenges from domestic brands

Medical device company Medtronic falls out of top 500

The two European companies that were eliminated are Germany's Fresenius Group, a multinational medical company that mainly deals in dialysis products and services, which ranked 346th last year; and Medtronic, which ranked 482nd last year. It is a global leading medical technology company in Ireland that mainly focuses on providing lifelong treatment, diagnosis and monitoring solutions for patients with chronic diseases such as cardiovascular disease, neurology, diabetes, and spinal diseases.

The reason why Medtronic fell out of the Fortune 500 is that it was strongly challenged by domestic brands. In the field of heart and brain pacemakers, and in high-value implants such as left ventricular assist (artificial heart) systems, domestic companies have caught up. Whether it is core indicators such as quality, weight or work efficiency, domestic brands are not much inferior, and some parameters are even more suitable for the actual needs of Chinese people. In terms of price, it is about 1/3 cheaper. This part of domestic products is also actively "going overseas", which has a significant impact on its market in Southeast Asia and other countries.

China Pharmaceutical and Shanghai Pharmaceutical are both listed in the "Wholesale: Health Care" category. Source: Fortune Chinese Network

02/

Diet pills become the new king of Europe

Helping America return as king

Among the 30 pharmaceutical companies on the list, 14 are pharmaceutical companies. The most noteworthy ones are Eli Lilly of the United States and Novo Nordisk of Denmark. The former is a return of the king, while the latter is a newcomer. Although these two pharmaceutical companies are at a disadvantage in the industry rankings, they are the "two heroes" of weight loss on the hottest track GLP-1. Novo Nordisk sold $21.2 billion last year (accounting for more than 60% of the company's total revenue) with semaglutide, the world's first long-acting weight loss drug approved for marketing. Compared with the sales revenue of $25.011 billion in 2023 of Merck K drug (pembrolizumab), the world's new "king of medicine" that has attracted much attention, the gap between the two is narrowing.

Unlike semaglutide, which is a single-target GLP-1 drug, Eli Lilly's telportide is the world's first GIP/GLP-1 dual-target weight loss drug approved for marketing. Although it was not approved by the FDA until the end of 2023, it generated $175.8 million in revenue in less than two months. It is reported that these two drugs have been launched in the Chinese market this year.

According to the latest version of the World Obesity Map released by the World Obesity Federation in March 2023, by 2035, more than 4 billion people in the world will be obese or overweight, accounting for 51% of the world's population. This huge market opportunity has also attracted Swiss pharmaceutical giant Roche (RHHBY.US), which withdrew from the competition more than ten years ago, to return to this hot track.

Chinese pharmaceutical companies are also actively making plans. In July last year, Huadong Medicine's biosimilar drug liraglutide was approved for weight loss indications in China, becoming the first GLP-1 weight loss drug to be marketed in China. In the same month, Renhui Bio's original innovative drug benaglutide was also approved for weight loss indications. Since the beginning of this year, players including Innovent Biologics, Hengrui Medicine, Borri Pharmaceuticals, and Ganli Pharmaceuticals have all accelerated the launch of related products. However, once the weight loss products of these Chinese pharmaceutical companies are launched, like the HPV vaccine, they will have to face the huge mountains built by multinational pharmaceutical giants in front of them.

There are 14 pharmaceutical companies on the list worldwide, and Guangzhou Pharmaceutical Group is the only domestic company on the list. Source: Fortune Chinese Network

02/

The two most profitable multinational pharmaceutical companies

Both companies have transformed to focus on innovative drugs and other businesses

According to statistics, the total profit of the world's top 500 companies in 2023 is close to 3 trillion US dollars, an increase of 2.3% over the previous year. Among them, pharmaceutical companies occupy two seats in the top 50 most profitable companies, namely Johnson & Johnson of the United States and Novartis of Switzerland.

Thanks to its comprehensive layout in the fields of medicine, medical devices and consumer goods, Johnson & Johnson not only ranked first among multinational pharmaceutical companies with a total revenue of US$85.2 billion in 2023, but also ranked 12th among the top 50 most profitable companies with a profit of US$35.153 billion in 2023; Swiss pharmaceutical giant Novartis, with a profit of US$14.85 billion in 2023, an increase of 113.5%, demonstrating strong market competitiveness and innovation capabilities, ranking 45th among the top 50 most profitable companies.

It is worth noting that in 2023, Johnson & Johnson officially completed the spin-off of its consumer healthcare business, focusing on the two higher-profit businesses of pharmaceuticals and medical technology. In addition to integrating this business into the Johnson & Johnson brand, the pharmaceutical business Janssen was renamed Johnson & Johnson Innovative Pharmaceuticals. Last year's results showed that Johnson & Johnson's pharmaceutical business achieved revenue of US$54.759 billion, a year-on-year increase of 4.2%.

Novartis' semi-annual financial report released last month also showed that the company had completed its transformation to a pure innovative drug business in 2023, with a clear focus on four core therapeutic areas: cardiovascular-renal-metabolic, immunology, neuroscience and oncology, and each field has multiple important assets on sale and in the pipeline to address the high disease burden and have huge growth potential. In 2023, Novartis' pharmaceutical business revenue was US$11.371 billion.

03/

Shanghai Pharmaceuticals and Guangzhou Pharmaceutical Group have improved their rankings significantly

The revenue scale is large enough but the earning ability is not strong enough

Among the three Chinese pharmaceutical and health companies on the list, China Pharmaceutical and Shanghai Pharmaceutical belong to the "Wholesale: Health Care" category, except for Guangzhou Pharmaceutical Group, which is a pharmaceutical company. China Pharmaceutical moved up one place compared to the previous year; Shanghai Pharmaceutical Group (hereinafter referred to as Shanghai Pharmaceutical), which has been on the list for five consecutive years, set a new record and moved up 27 places.

According to the data, China Pharmaceutical's main businesses include pharmaceutical industry, medical devices, and international trade. It is reported that in 2023, China Pharmaceutical achieved a total operating income of 38.824 billion yuan, a year-on-year increase of 3.28%; net profit attributable to shareholders of the parent company was 1.048 billion yuan, a year-on-year increase of 42.47%.

Three Chinese pharmaceutical and health companies on the list. Source: Fortune Chinese website

Shanghai Pharmaceuticals is a large pharmaceutical industry group listed in Shanghai and Hong Kong, with the controlling shareholder being Shanghai Industrial Group. Shanghai Pharmaceuticals' operating income in 2023 jumped to 260 billion yuan, a year-on-year increase of 12.21%. Its business segments are mainly divided into two major blocks: pharmaceutical commerce and pharmaceutical industry. In the pharmaceutical commerce sector, its innovative drug import services rank in the first echelon in the country. But compared with Zhifei Biological, Shanghai Pharmaceuticals' sales revenue of 5.2 billion yuan in imported vaccines last year can only be regarded as pediatrics. Chongqing Zhifei Biological has made a lot of money by acting as an agent for a number of vaccine products from Merck and GlaxoSmithKline. According to its 2023 annual report, its agency products achieved revenue of 51.885 billion yuan, a year-on-year increase of 48.35%, accounting for 98.05% of its operating income.

In terms of pharmaceuticals, Shanghai Pharmaceuticals currently produces about 750 varieties of drugs throughout the year, mainly covering seven major therapeutic areas: anti-tumor, cardiovascular and cerebrovascular, psychoneurological, anti-infection, autoimmune, digestive metabolism, and respiratory systems. According to the 2023 annual report, during the reporting period, the company had 68 new drug pipelines under development, including 55 innovative drugs and 13 improved new drugs. Currently, three Class 1 new drugs have submitted pre-NDA or listing applications, and four are in pivotal research or clinical phase III.

Most notably, like Guangzhou Pharmaceutical Group, Shanghai Pharmaceuticals also has traditional Chinese medicine business and owns many time-honored brands, such as Lei Yunshang and Hu Qingyu Tang. In 2023, it achieved revenue of 9.817 billion yuan, a year-on-year increase of 10.30%. As the world's first company to enter the Fortune Global 500 with traditional Chinese medicine as its main business, Guangzhou Pharmaceutical Group's revenue from traditional Chinese medicine in 2023 was only 6.271 billion yuan.

Although revenue is up, net profit is down. Last year, Shanghai Pharmaceuticals' net profit attributable to the parent company was 3.768 billion yuan, a year-on-year decrease of 32.92%. It is reported that in the past two years, Shanghai Pharmaceuticals has frequently been caught up in high-price, anti-corruption and other turmoil and high-level turmoil. The company has changed its leader four times in four years. In December last year, due to monopoly issues, Shanghai Pharmaceuticals' wholly-owned subsidiary was not only issued a high fine, but also caused two major price cuts for its exclusive products with annual sales of 1.6 billion yuan, with a cumulative reduction of more than 95.8%. On August 5 this year, Shanghai Pharmaceuticals issued an announcement stating that the company's board of directors received a written resignation report from Zhang Yaohua, and the reason for his resignation was job transfer.

Guangzhou Pharmaceutical Group has made great progress, advancing nine places from last year. Compared with 468th place in 2021, it has risen by 51 places. In terms of revenue scale, it will be 75.515 billion yuan in 2023, an increase of 6.501 billion yuan from 69.014 billion yuan in 2021. However, its earning power does not match its revenue. Net profit increased from 3.720 billion yuan in 2021 to 4.056 billion yuan in 2023, an increase of only 336 million yuan.

Last month, Li Chuyuan, chairman of Guangzhou Pharmaceutical Group, resigned for personal reasons, and Yang Jun, vice chairman of the company, took over the duties of chairman of the company. It is worth waiting to see whether Guangzhou Pharmaceutical Group will have a different prospect after the change of leadership.

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Produced by: Nandu Health News

Co-ordinator: Wang Daobin

Written by: Southern Metropolis Daily reporter Huang Haishan

Southern Metropolis Daily Map: Shen Shuting