The Contrasting Fates of Big Pharma and Biotech: A Three-Year Analysis
The pharmaceutical industry experienced contrasting fortunes between 2021 and 2023. While the index of big pharma rose by a third, outperforming the broader stock market due to strong sales of blockbuster drugs, the index of smaller biotechnology companies sank by roughly the same amount.
Despite these challenges, the giants in the pharmaceutical industry continued to thrive. Eli Lilly, known for its hit weight-loss treatment, reported strong quarterly results on April 30th. On May 2nd, Novo Nordisk, a Danish rival with its own anti-obesity drug, was expected to do the same. The combined value of these two giants increased from $350bn to $1.2trn in three years.
On the other hand, biotech companies were weighed down by rising interest rates and dissipating pandemic-era euphoria for all things medical. Unlisted biotech startups found it challenging to attract capital, with investments dropping from $37bn to $17bn in just two years. Fewer startups went public, and more went bust during this period. However, there are positive signs for the biotech sector as well, with their overall health improving. This is promising news for investors, patients, and the pharmaceutical industry as a whole.
