Big Biotech Outpaces Big Pharma, Burrill & Company Says
As Industry Gathers for Annual BIO International Convention, Sector Outshines in Creating Value
SAN FRANCISCO, CA--(Marketwired - Apr 16, 2013) - As healthcare shifts to a new value-based focus, Big Biotech companies are demonstrating they are better positioned than their pharmaceutical industry counterparts to meet changing demands. Big Biotech has outpaced Big Pharma in terms of growth of sales, income, investment in R&D, and market cap during the past three years, according to an analysis by Burrill & Company.
"As the industry migrates away from an era of the one-size-fits all blockbuster, the biotechnology industry's strength at developing innovative therapies that meet unmet medical needs and target the molecular mechanisms of diseases gives it an upper hand in creating value," says G. Steven Burrill, CEO of Burrill & Company, a global financial services firm focused exclusively on the life sciences. "But as pricing pressures become an increasingly challenging prospect for pharmaceutical and biotechnology companies alike, they will need to find new ways to build relationships with payers, providers, and patients to capture value outside of their products."
Burrill explores these themes in his new book Biotech 2013-Life Sciences: Capturing Value. Burrill & Company's 27(th) annual report on the life sciences industry explains the changing demands on life sciences companies in a world where payers are demanding not only that products are safe and effective, but that they provide value too.
THREE-YEAR GROWTH BIG PHARMA VS. BIG BIOTECH (2009
SECTOR REVENUE INCOME SPEND MARKET CAP
Big Pharma 17.0% 1.1% 11.7% 17.4%
Big Biotech 40.6% 21.6% 38.7% 57.0%
Big Biotech enjoyed a 57 percent increase in market cap for the three years ending December 31, 2012 as the total value of the group climbed to $260.6 billion from $160.1 billion at the end of 2009. That compared to a 17.4 percent increase for Big Pharma during the same period as the market cap for the group climbed to a collective $1,257 billion from $1,070 billion.
"The big jump in the value of Big Biotech companies is not just a matter of investor speculation," says Burrill. "These companies have had significant clinical and market successes that have driven their values higher."
Net income for Big Biotech jumped 23.3 percent during the three-year period to $11.0 billion from $8.9 billion. That compared to just a 1.1 percent increase for Big Pharma, as its net income rose to $96.4 billion from $95.4 billion.
Revenue growth for Big Biotech grew 40.6 percent to $48.6 billion at the end of 2012 from $34.3 billion three years prior. That compared to just a 17 percent increase for Big Pharma as revenue rose to $526.8 billion from $450.1 billion during the same period.
The growth in revenue for Big Biotech has been reinvested into increased R&D spending, which has grown 38.8 percent to $10.3 billion. That's more than triple the 11.7 percent increase in R&D spending by Big Pharma during the period as spending reached $76.3 billion at the end of 2012, up from $68.3 billion.
"As Big Pharma looks to replace revenue lost to patent expirations, it is looking to biotech breakthroughs to make up the gap," says Burrill. "It is biotech's products that will dominate the list of top-selling drugs for Big Pharma and be the most prized assets in their pipelines."
The analysis is based on data from the S&P Capital IQ database. Big Pharma companies included Johnson & Johnson, Pfizer, Roche, Novartis, Merck, Sanofi, Novo Nordisk, GlaxoSmithKline, Bayer, Eli Lilly, Bristol-Myers Squibb, and AstraZeneca. Big Biotech companies used in the analysis included Amgen, Gilead Sciences, Biogen Idec, Celgene, Alexion Pharmaceuticals, Regeneron Pharmaceuticals, Shire, Vertex Pharmaceuticals, BioMarin Pharmaceutical, Elan, and Onyx.
Burrill will discuss trends in the industry and the themes in his latest book, Biotech 2013-Life Sciences: Capturing Value during a supersession at the BIO International Convention on Tuesday, April 23 at 2 p.m. at McCormick Place in Chicago. Attendees of the conference will also be able to purchase the book at a BIO International Convention discounted price of $99 (a $50 savings) for either the print or digital edition. The rate is being honored through April 30, 2013 online as well at www.burrillmedia.com. Just enter the discount code "FRANKLIN50" during checkout. Qualified media may request a review copy of Biotech 2013 by sending an email to [email protected]
Burrill & Company will also be holding The Burrill Pan-Asia Life Sciences Meeting on Sunday, April 21 at The Newberry, 60 W. Walton Street in Chicago. The event brings together innovative industry leaders from China, India, South Korea, Malaysia, Singapore, Taiwan, Australia, and New Zealand for a three-hour meeting to discuss the growing number of new healthcare and bioenergy opportunities in these countries. CEOs will provide a ground-level view and discuss their experiences doing business in Asia and Australia. The meeting is for CEOs; industry managers working in Asia and Australia, or seeking to do business there; entrepreneurs interested in opportunities to build businesses in the region; and scientific and academic leaders interested in regional developments in biotechnology.
About Burrill & Company
Founded in 1994, Burrill & Company is a diversified global financial services firm focused on the life sciences industry. With $1.5 billion in assets under management, the firm's businesses include venture capital/private equity, merchant banking, and media. By leveraging the scientific and business networks of its team, Burrill & Company has established unrivaled access and visibility in the life sciences industry. This unique combination of resources and capabilities enables the company to provide life sciences companies with capital, transactional support, management expertise, insight, market intelligence, and analysis through its investments, conferences, and publications. Headquartered in San Francisco, the company oversees a global network of offices throughout the United States, Latin America, Europe, and Asia. For more information visit: www.burrillandco.com.
Burrill & Company