Big Pharma’s New Chapter: M&A, Metabolism &the Outsourcing Boom

The year 2024 was a study in contrasts for the pharmaceutical industry. Total drug sales largely rebounded as the pandemic waned, yet growth came unevenly—colossal revenue windfalls from COVID-19 products faded, even as new blockbuster therapies, notably for obesity and chronic diseases, took flight. The cumulative prescription drug sales of the Top 20 pharma companies (ranked by 2024 revenue) climbed to new heights, with most firms posting gains and a few outliers grappling with losses. 

Pfizer once again led the pack with $63.6 billion in pharmaceutical revenues, while Merck, riding high on oncology franchises, surged into the number two spot. Johnson & Johnson’s pharma division and Abbvie followed closely, each exceeding $55 billion in drug sales. On the other end, companies like Bristol Myers Squibb (BMS) saw profits decline amid major patent cliffs in 2024. The shake-up underscored a broader theme: an industry in realignment, where agile deal-making, strategic focus, and innovation in R&D dictated winners and losers.

Mega-Mergers, Spin-Offs & Restructuring Wave

If 2023 set the M&A stage, 2024 delivered the payoff. Some of the industry’s largest acquisitions in recent memory closed or took effect during the year, reshaping pipelines and portfolios across the Top 20. After clearing regulatory hurdles, Pfizer consummated its $43 billion takeover of Seagen in December 2023—an oncology-driven deal that doubled Pfizer’s pipeline of antibody-drug conjugates (ADCs) and fortified its post-COVID strategy. The impact was fully felt in 2024: Pfizer’s oncology sales jumped, and management touted approximately $20 billion in potential 2030 revenues from Seagen’s portfolio. Almost simultaneously, Amgen finalized its $27.8 billion purchase of Horizon Therapeutics, adding lucrative rare-disease drugs like Tepezza and Krystexxa to Amgen’s inventory. Both Pfizer and Amgen spent much of 2024 digesting these mega-deals—integrating new workforces and R&D units—while assuring investors the buys would reignite long-term growth.

Meanwhile, BMS executed a bolt-on acquisition of Mirati Therapeutics in early 2024, targeting a promising KRAS-inhibitor cancer drug to bolster its oncology lineup. Merck, which in late 2023 closed its own big buy (immunology-focused Prometheus Bio-sciences for ~$10.8B), reaped the benefits as the acquired ulcerative colitis drug fitilimod neared Phase 3. Even Eli Lilly—riding high on surging sales—joined the fray, snapping up smaller players, such as Versanis for obesity combination therapy, to augment its thriving diabetes franchise.

Perhaps even more transformative were the strategic spin-offs and restructurings completed in 2024. Novartis’s separation of Sandoz, its generics and biosimilars division, was finalized by late 2023, meaning 2024 is Novartis’s first full year as a pure-play innovative medicines company. Novartis’s CEO touted a “new chapter” in which the slimmed-down firm could devote all resources to novel therapeutics. Likewise, Johnson & Johnson completed the spin-out of its consumer health unit, Kenvue, in late 2023, leaving J&J’s 2024 revenues entirely from pharmaceuticals and medtech. The pharma division, now J&J’s largest segment, grew solidly in 2024 (∼$57B sales) on the back of drugs like Darzalex and Stelara. 

Manufacturing Muscle & Outsourcing Partnerships on the Rise

For outsourcing and manufacturing professionals, 2024 may be remembered as the year capacity and partnerships took center stage. The explosive success of GLP-1 medicines for diabetes and obesity—Eli Lilly’s Mounjaro and Novo Nordisk’s Ozempic/Wegovy—created unprecedented demand for biologics manufacturing. 

Both Lilly and Novo raced to invest in production: Lilly poured billions into expanding plants in Indiana and North Carolina, while Novo Nordisk kicked off construction of new API facilities in Denmark and agreed to fill-finish partnerships in addition to the purchase of CDMO Catalent to boost output. 

These companies frankly could not fill pens fast enough. Lilly’s incretin franchise drove a 32% jump in revenue in 2024, and Novo’s sales leapt 25% to approximately $42 billion—but continuing that trajectory meant leaning heavily on contract manufacturers for everything from drug substance to device assembly. “We are essentially sold out of capacity,” Lilly’s CEO admitted mid-year, as the company inked additional outsourcing deals to ensure supply.

Beyond biologics, the next-generation therapies coming to market—from cell and gene therapies to mRNA vaccines—have pushed Big Pharma into novel manufacturing partnerships. Several Top 20 firms that lacked internal capabilities in these areas turned to contract development and manufacturing organizations (CDMOs). 

For example, BMS and 2seventy bio’s Abecma (CAR-T) manufacturing continued to rely on an alliance with Cellular Therapies for lentiviral vector supply. Pfizer, after its mRNA vaccine experience, partnered with CDMOs to bolster its gene therapy pipeline production, including deals for PF-06939926, a Duchenne gene therapy. Novartis outsourced much of its gene therapy manufacturing for Zolgensma and pipeline assets to specialist CDMOs, following the model it set with AveXis. 

At the same time, emerging markets and supply chain security also drove outsourcing: companies increased use of secondary suppliers and local contract manufacturers to “on-shore” or “near-shore” production, hedging against geopolitical and logistical risks. Notably, onshoring incentives in the U.S. (such as the Inflation Reduction Act’s tax credits) spurred investments like J&J’s expanded vaccine fill-finish in the U.S. and Sanofi’s planned mRNA center in Toronto—often in tandem with government or partner funding.

Outsourcing partnerships weren’t limited to manufacturing. Many Big Pharma companies sought external help in R&D via co-development and licensing deals. 

Pfizer, for instance, struck a high-profile alliance with Flagship Pioneering to scout new clinical candidates, effectively outsourcing some early R&D idea generation. Merck extended a partnership with CDMO Olympus to manage certain formulation development, reflecting a trend of farming out complex drug delivery work. And GSK, focusing on its vaccine and specialty medicines core, sold off or partnered its remaining small-molecule assets—handing over late-stage antibiotic development to external hands and entrusting contract research organizations (CROs) with more of its clinical trial operations. 

For the outsourcing sector, all this translated into robust demand in 2024: industry reports showed CRO/CDMO bookings growing as biopharma sponsors, big and small, sought efficiency. In short, 2024 underscored that even pharma giants increasingly “don’t go it alone”—whether to scale up manufacturing quickly or to access specialized expertise, partnerships were paramount.

Financial Fortunes: Peaks, Valleys & Spend Shifts

The divergent financial results of 2024’s top players highlighted critical industry trends. Perhaps most striking was the reversal of fortune for COVID-centric companies versus those with diverse portfolios. Pfizer’s pharmaceutical revenue climbed 7% to $63.6 billion—a solid gain excluding its lost COVID sales—yet its reported net income remained relatively low ($8.0B) after accounting for write-downs on Paxlovid inventory and heavy R&D spending. In contrast, Merck enjoyed record profits of more than $17 billion as its oncology and vaccines units fired on all cylinders. Merck actually surpassed J&J and AbbVie in annual pharma revenue for the first time, reflecting Keytruda’s unrivaled growth—sales were up 18% to $29.5 billion.

For AbbVie, 2024 was a transition year: the firm absorbed the full brunt of Humira’s U.S. patent expiry. While sales of the immunology blockbuster cratered by over 30%, Abbvie impressively managed a 3.7% increase in total revenues to $56.3 billion thanks to its “twin” autoimmune drugs Skyrizi and Rinvoq more than doubling in sales. Still, the Humira cliff took a bite out of AbbVie’s bottom line, but investment in next-gen immunology is paying off.

Meanwhile, the metabolic renaissance powered huge top-line gains for others. Novo Nordisk’s 26% revenue growth translated into a 20% jump in net profit to roughly $14.6 billion. Eli Lilly, too, saw its financials soar on the back of Mounjaro’s success. In fact, by year-end Lilly cracked the top 10 in pharma sales and its profit more than doubled to $10.6 billion. AstraZeneca likewise delivered a very strong performance in 2024 with total revenue up 21%, fueled by its diversified portfolio of oncology, rare disease, and general medicines, which all grew double digits.

Looking at R&D spending, nearly every top 20 company increased investment in 2024, even as some cut operating costs elsewhere. The collective message was that future growth hinges on innovation. R&D as a percent of sales hit record levels at several firms: Boehringer Ingelheim, for one, invested 23% of revenue into R&D, while AstraZeneca and Lilly both hovered around 25% of sales in R&D spend. Importantly, many of these R&D dollars went toward new modalities and technologies (e.g. gene editing, AI-driven drug design, and next-gen biologics). Pfizer, for instance, cited plans to file up to 10 new molecular entities in the next 18 months, ranging from gene therapies to oral GLP-1s—the fruits of its expanded R&D budget and recent business development.

For the outsourcing sector, these financial dynamics imply a robust pipeline of projects but also intense cost-consciousness among sponsors. High-profit companies like Merck and Novartis have cash to pour into external collaborations, whereas those under earnings pressure (GSK, Teva, Viatris) are likely to shop for cost-efficient outsourcing solutions and may delay or scale back some programs. 

Contract service providers that can demonstrate value—accelerating timelines or reducing costs—stand to benefit from the ongoing productivity push at Big Pharma. Back at the beginning of 2024, Brian Scanlan, operating partner for life sciences at Edgewater Capital Partners, observed in an article he penned for Contract Pharma, that the CRO/CDMO sector is adjusting to a more measured demand environment after the frantic pandemic years: “Biotech funding has stabilized at healthy, if not exuberant, levels, and Big Pharma’s war chests remain large. The consensus is that outsourcing demand will remain relatively strong, albeit somewhat muted in the near term—a welcome stability after the boom-bust swings of 2020–2022.”

Outsourcing Outlook: Trends to Watch Post-2024

From the perspective of Contract Pharma’s audience, the events of 2024 carry important implications. Firstly, Big Pharma’s flurry of M&A and refocusing moves means many companies will rely on external partners to maintain momentum while integration and restructuring are underway. We’ve seen Pfizer and Amgen quickly outsource certain functions post-acquisition to avoid disruption in supply chains—a trend likely to continue for others pursuing bolt-on deals. 

Secondly, the manufacturing investments announced, and the sheer volume of new facilities under construction, indicate that capacity will tighten in specific areas (biologics, cell/gene therapy) before it eventually eases. CDMOs with available capacity or specialized technology in these domains are poised to see high utilization and potentially pricing power in the short term, until all the new Pfizer/Lilly/Novo plants come online by mid-decade.

Additionally, the pivot to new therapeutic areas (obesity, Alzheimer’s, etc.) for many top pharmas means new expertise requirements—an opportunity for niche CROs/CDMOs. For example, as Lilly and Novo delve deeper into obesity, they may seek partners for novel formulation work (oral peptides, fixed-dose combos). Biogen and Eisai’s Alzheimer’s programs could benefit from external biomarker and diagnostics specialists, as patient identification becomes key. And nearly everyone in the top 20 is hunting for the next big RNA or gene therapy, which often means partnering with biotech innovators and relying on boutique manufacturers skilled in viral vectors or lipid nanoparticles.

In sum, 2024 was a pivotal year that rebalanced the pharmaceutical landscape. Major companies emerged from the pandemic era with clearer strategic focus—some leaner, some bolder—and an unwavering commitment to scientific innovation. The blockbuster du jour has shifted from COVID vaccines to obesity injections, yet the industry’s fundamental growth engine remains the same: invest in R&D (internally or via partnerships) to bring important new therapies to patients. 

For outsourcing professionals, the take-home message is encouraging. As Big Pharma navigates this new chapter—chasing burgeoning demand and managing growing pains in areas like metabolic disease, adapting to revenue swings, and integrating acquisitions—they will continue to lean on external partners for speed, flexibility, and expertise. The year 2024 showed us dramatic swings in revenue and rank, but also that no company succeeds alone. In an era of both booming demand and daunting challenges, collaboration up and down the supply chain will be more critical than ever in translating pharma’s financial wins into sustained progress for patients.

Sources: Company annual reports, press releases, and Contract Pharma news on 2024 results and trends.