The investment firm Cowen (NASDAQ:COWN) recently revealed the results of its first "research and development pentathlon" that evaluated multiple big drugmakers. In this Motley Fool Live video recorded on July 28, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss the winners in Cowen's R&D contest.
Keith Speights: The investment firm Cowen just announced results from its first-ever research and development pentathlon. The Wall Street firm evaluated multiple big drugmakers on how they jumped five different hurdles related to their R&D programs. What do you make of Cowen's R&D games here, and which companies were the winners?
Brian Orelli: This only looked at large drugmakers, and they looked at data from 2012-2021. The companies were scored by their ability to get drugs through development efficiently. The five measurements were basically on speed and effectiveness in different aspects of speed.
Novo Nordisk (NYSE:NVO) took the gold, Merck (NYSE:MRK) took the silver, and Roche (OTC:RHHBY) took the bronze. AbbVie (NYSE:ABBV) and Eli Lilly (NYSE:LLY) rounded out the top five. Then in the bottom two were Pfizer (NYSE:PFE) and Novartis (NYSE:NVS), and there were quite a few in the middle.
The problem with these comparisons -- and Cowen fully acknowledges that they're just subjective -- how much weight you give each category obviously matters a lot.
Cowen said that Novo Nordisk probably won due to its focused pipeline. That larger pipelines seemed to hurt companies, although Roche was an exception there, and they have a pretty large pipeline and they were able to take silver. But a lot of the companies with larger pipelines seemed to be get hurt by their scoring process. Obviously, that's not necessarily what you would like to see as an investor. You'd like to actually see a large pipeline.
Obviously, the companies still have to be effective at developing the drugs in their pipeline, but obviously larger is typically better from an investor standpoint, all things being equal. The other question is, how do you measure the results? A lot of it was based on clinicaltrials.gov's data. But companies have some leeway in when they make changes to clinicaltrials.gov and when they put in their clinical trials into the system.
I think that that could actually be affecting the companies in ways that doesn't necessarily measure the actual effectiveness of the companies. They're just measuring when they are actually putting the data into the system.
They're not necessarily putting in the system thinking that Cowen's going to be measuring this, and so we should wait and not put it until we're really ready. If they put it in early and then Cowen as measuring that as delay in the clinical trial start date where another company might just put it in later because they don't really care and they're just putting it in right before they start the clinical trial. I think that confounds the results.