Methodology: R&D Productivity Ranking

To evaluate the R&D productivity of the world’s 30 largest public pharmaceutical companies, as judged by total pharmaceutical sales, the Catenion methodology takes an approach that focuses on value. We compared the total R&D spending from 2005 to 2015 including costs from M&A (see below) and a 7% cost of capital with the total expected net present value (eNPV) today of compounds marketed in the last five years and all pipeline products.

Using these data, two distinct rankings were calculated – a momentum and a long-term ranking. The momentum ranking aims to capture the value a company is forecasted to generate by taking the current NPV of its entire pipeline and dividing it by the firm’s R&D and M&A costs, both adjusted for cost of capital, as described above