Want investment and innovation? Call yourself a ‘biopharma’ firm

With consistent year-on-year growth of around 12%, biopharma is the ‘favored child’ of the drug industry, says BioPlan Associates’ Eric Langer.

At the first BIOLive event at CPhI Worldwide in Madrid this week, Eric Langer, president and managing partner at BioPlan Associates, told delegates innovation and sales revenue have driven the divide between the biopharma (large molecule) and the traditional small molecule pharma industries.

“Today’s market is around $250 billion in biopharma sales, and this is still an emerging market but what we are seeing here is 25% of all pharmaceutical revenue is now bio; large molecules” he told delegates. “This represents a growth of 57 times since the emergence of biopharma [28 years ago] but more importantly a 12% annual growth rate over the last 12 years.”

BIOLive formed part of CPhI Worldwide 2018 in Madrid, Spain

This has given the pharma industry as a whole a level of consistency that it has never had before, he argued. “Pharma has been around a 4% growth rate, but biopharma has been demonstrating this 12% growth rate year-on-year and that’s very exciting for investors.”

Furthermore, 45% of products in the pipeline are biologics, he continued, adding that this makes biopharma companies even more attractive again to investors going forward.

The ‘Bio’ illusion

The phrase ‘biopharma’ is being misused by traditional small molecule drugmakers. When a firm calls itself a ‘biopharma company’ it implies an element of biotech.

“It sounds higher tech,” Langer said, but just because you use a biotech component in your process, it does not mean your product is a biopharmaceutical. It does, however mean, that you are potentially more investable by people that want to be part of the new wave of drugmaking, he continued.

The words ‘biotech’ and ‘biopharma’ are “sexier than the word drug,” he added, and this is driving investment in both the small innovator biotech firms and the traditional big pharma companies that have embraced the ‘bio’ prefix.

Industry’s ‘favored child’

Langer also talked about why the large pharma companies are reluctant to fully integrate their actual biotech subsidiaries and acquisitions into their overarching business. Janssen Biotech, for example, is distinguished from its parent company Johnson & Johnson; Genentech is the ‘biotech’ part of the Roche group etc.

Eric Langer, president and managing partner at BioPlan Associates, opened the BIOLive sessions

“In a way the biopharma community is getting special treatment from their parent company,” he said, adding there is evidence that biopharma subsidiaries of large pharma companies are getting special treatment.

“They are not being so integrated as one might have expected and they continue to have a certain degree of independence.”

Part of the reason is that big pharma sees biopharma as a “favored child,” simply due to being more profitable. But firms are also aware of the innovation being driven from the biotech side and are reluctant to merge them too much with their traditional business. “If you integrate too hard you run the risk of killing that innovation.”