What are the differences between biotech and pharmaceutical companies?

difference between biotech n pharma companies

Answer by Jane Chin:

Let's go for the major stereotypical differences between biotech and pharma.

Pharma stereotypically has the marketing and economical power to bring a pipeline to fruition *and* engage the sales and marketing forces to then commercialize a product.

Biotech stereotypically has novel intellectual property or some new technology that make for an attractive pipeline to develop into a commercially viable product, but usually not the scale in sales and marketing to make this happen.

[source: Google Finance "Related" company list — So which one may be considered "Big Biotech", which one "Small Pharma"?]

In the OLD, old days, pharma has teams of R&D scientists who may be viewed almost as if they were working in a biotech-like environment, whose main role is to discover new drugs and enrich the IP assets of the pharma company. Your big pharmas like Pfizer (swallowing Warner Lambert and Parke Davis and various biotechs) and GlaxoSmithKline nee GlaxoWellcome/Smithkline Beecham and Novartis nee Ciba-Geigy/Sandoz are such major pharma powers that apparently wants to grow bigger :cough PfizerAstraZeneca cough:

In the OLD, old days, biotech dreams of becoming a vertically integrated organization such that they don't stay "biotech" but "pharma like" in their ability to conduct clinical trials (clinically develop a lead compound through the pipeline), submit for regulatory approval (getting a product label/indication), and commercialize that product. Your big biotechs like Amgen and Genentech certainly fit that story: these started out as smaller biotech companies and have since become more "pharma like" in terms of market capitalization as well as commercialization ability.

Then you have an interesting sector called the mid-size pharma companies, or specialty pharmaceutical companies, that focuses on a particular niche or technology but then become successful enough to then appear more "big pharma" like.

These days, big pharma companies are getting bloated with overhead and appear starved for innovation. Biotech companies seem to be burning through cash faster than ever before and many appear to be interested in becoming acquired than aiming to be a vertically integrated small pharma. Even specialty pharma companies appear to be willing to break as many rules (read: off-label marketing) as their big pharma counterpart and Allergan even tried suing the FDA for specific aspects of off-label discussions it believes to be justified and not have these be penalized as off-label promotion (illegal)….

[Source: Google Finance. Now we have a clearer "split" of companies that are truly "Big Biotech" like CELG and AMGN and some of the smaller "start-up" biotechs like EPZM and PCYC, by looking at market capitalization. We can also compare with traditionally recognized "big pharmas" like NVS and JNJ. By the way, EPZM's technology has been licensed to CELG for ex-US marketing, and to GSK for certain indications. Thus even big biotechs are now acting pharma-like and licensing/acquiring rights to technologies of small / start-up biotechs.]

In other words, when we're talking about the main players in the biopharma arena, it makes no sense to speak of "pharma" or "biotech", at least, no longer. Today it makes more sense to look at their niches and competitive strategies or positioning in a particular therapeutic area.

What are the differences between biotech and pharmaceutical companies?


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