The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Why the biotechs outpace big pharma

With the major pharmaceuticals companies facing up to a bloated cost structure and the legacy of two decades of underinvestment, the biotechnology industry is more or less guaranteed to outgrow the big drugs firms because of it structure.

Last year was awful for big pharma, with big US companies lagging the S&P500 by 28%. This has left the sector trading at the cheapest it has been relative to the market as a whole in 10 years. This is not a temporary affair. It is the result of big pharma focusing on marketing at the expense of developing new drugs. The number of new drugs approved in 2004 is about the same as in 1985. Yet the cost base has grown sharply over this time. The average big pharma company now spends about 32% of its budget on sales and marketing, roughly the same as companies selling soda or candy.

Luckily for biotech companies, the pressures on big pharma either have little effect or may even be beneficial for them. And the market's differing reactions to the two sectors last year reflects this. Big drugs stocks ended 2004 down 7%; biotech stocks rose by 12%.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree