Frankfurt Strong growth in the diabetes drug Jardiance and positive currency effects brought the pharmaceutical company Boehringer Ingelheim 2022 the largest increase in sales in a good two decades. For the first time in years, high research expenditures have resulted in above-average growth for the Ingelheim-based family company. The successful development enables the company to continue to invest heavily: In Germany alone, investments in property, plant and equipment are to be increased from the last 490 million euros to more than 720 million euros this year.
Overall, the Ingelheim-based family company increased its group turnover by 17 percent to 24 billion euros. Factoring out positive currency effects, according to the company, revenues grew by 10.4 percent. The operating result, on the other hand, increased only slightly to 4.8 billion euros due to higher research, energy and other costs. The group reports profit after tax of just under 3.2 billion euros, which is around seven percent lower than in the previous year.
Company boss Hubertus von Baumbach considers further advances in product development, which have been further accelerated, to be a decisive success. Around 20 new drug approvals are now expected for the next seven years. Most recently, the group promised 15 new registrations by the middle of the decade.
“The year 2022 has shown that our long-term commitment to medical research is the right strategy,” says von Baumbach. “We have now found new medical solutions that could bring about a real breakthrough for some diseases that were previously considered difficult to treat.”
For the current year 2023, Boehringer only expects “moderate” sales growth and a slight increase in operating profit. Von Baumbach believes that the medium-term prospects are further strengthened in view of a strong pipeline.
Human pharmaceutical business grows by a fifth
Boehringer hopes to launch new drugs for kidney failure, pulmonary fibrosis, schizophrenia, obesity and cancer in the next few years. A drug candidate against pulmonary fibrosis – a disease in which the lung tissue becomes increasingly scarred – was classified by the US Food and Drug Administration as a potential breakthrough therapy last year, similar to three other development projects before it. Boehringer is already the market leader in this area with its drug Ofev, which also grew strongly in 2022. The US authorities promised an accelerated approval process for three further development projects.
Boehringer increased research spending by a fifth to 5 billion euros in 2022 and currently has a significantly higher R&D expense ratio of around 24 percent in the pharmaceutical sector than many of its competitors. In the industry, the ratio recently averaged around 18 percent.
“The year 2022 has shown that our long-term commitment to medical research is the right strategy,” explained von Baumbach.
(Photo: IMAGO/sepp spiegl)
Boehringer’s human pharmaceuticals division increased its sales by a fifth and currency-adjusted by 13.6 percent to 18.5 billion euros. Along with companies such as Pfizer, Merck & Co and Novo Nordisk, Boehringer was one of the fastest-growing companies in the pharmaceuticals industry and was able to catch up with the German industry leader Bayer for the first time in the human pharmaceuticals business, whose pharmaceuticals business is currently being slowed down by patent expirations.
In biopharmaceutical contract manufacturing, the group increased currency-adjusted by eleven percent, while sales in the veterinary medicines business stagnated at 4.6 billion euros.
Unlike Bayer, Boehringer is initially only moderately affected by patent expirations. According to the company, the currently most important growth driver, the diabetes drug Jardiance, will be protected from generic competition until the end of the decade.
Jardiance on the way to becoming a mega blockbuster
This active ingredient has now turned out to be the greatest success in the company’s history. In 2022, sales of the medium rose by almost 50 percent in nominal terms and by 39 percent in constant currency to 5.8 billion euros.
The strong growth in revenue is mainly due to the fact that Jardiance was approved in the past two years for the treatment of various forms of heart failure in addition to diabetes, following positive study data.
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Another surge in sales is emerging for the drug in the treatment of kidney failure. Here, too, Jardiance showed positive data in a large study last year. Boehringer and its US sales partner Eli Lilly are therefore now aiming for approval in this indication as well. The group of patients for whom the drug is an option would be significantly expanded – by more than 800,000 people worldwide. Against this background, von Baumbach does not rule out the possibility that Jardiance could exceed the sales threshold of ten billion euros in the medium term and thus become one of the few mega blockbusters in the pharmaceuticals business.
With a jump in sales of more than 60 percent, Jardiance also made a significant contribution to the growth of Boehringer Ingelheim in Germany. In Germany, the company increased its sales by twelve percent to 2.1 billion euros. For Boehringer, Germany is the largest market in Europe, in which the company continues to invest disproportionately.
About half of the investments planned for this year, amounting to around 720 million euros, are to flow into the Ingelheim and Biberach locations. In addition to the construction of new production facilities, a photovoltaic power plant is to be completed at the headquarters in Ingelheim by the end of the year, which will make Boehringer independent of gas supplies. A new research and development center will soon be opened at the Biberach site, in which a total of 350 million euros have been invested.
Germany is losing its attractiveness
Like other pharmaceutical companies, the management team at Boehringer Ingelheim warns that Germany is becoming increasingly less attractive for the industry, which “massively jeopardizes” future investment decisions, as Country Manager Sabine Nikolaus emphasized. Above all, bureaucracy, a lack of data use and low investment incentives are criticized, with the focus here being on the law passed in autumn to strengthen statutory health insurance companies. For the pharmaceutical industry, this means higher compulsory discounts and restrictions on the pricing of innovative medicines.
The low prices drove the generics industry out of Germany, says Boehringer manager Nikolaus. That shouldn’t happen with the research-based pharmaceutical industry as well. Boehringer Ingelheim invests almost half of its research and development expenditure as well as capital expenditure in Germany. “That’s a lot more than we implement here,” says country manager Nikolaus.
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