Biogen Idec, big biotechs trounce pharma players on multiple fronts this decade

This could be the decade of the big biotech companies, or Big Biotech. A new analysis shows that the biggest biotech players have outperformed a group of pharma giants over the previous three years, with the value of the biotech group up 57% compared with 17.4% growth in the pharma camp. The findings come as Biogen Idec ($BIIB), Gilead Sciences ($GILD) and other major biotech groups reach new heights, and while many of their pharma counterparts including AstraZeneca and Bristol-Myers Squibb trip over hurdles such as generics competition and pricing pressures, Burrill & Company finds.

Burrill, an investment and publishing company, analyzed data from the S&P Capital IQ database, measuring the performance of a dozen large pharma companies--including Johnson & Johnson ($JNJ), Pfizer ($PFE), Novartis ($NVS), Roche ($RHHBY), Sanofi ($SNY), Novo Nordisk ($NVO), Merck ($MRK), GlaxoSmithKline ($GSK), Bayer, Eli Lilly ($LLY), AstraZeneca ($AZN) and Bristol-Myers Squibb ($BMY)--against the results from Amgen ($AMGN), Biogen, Gilead, Celgene ($CELG), Alexion Pharmaceuticals ($ALXN), Regeneron Pharmaceuticals ($REGN), Shire, BioMarin, Elan and Onyx over the past three years ending December 31, 2012.

G. Steven Burrill

There are many ways to play the statistics game to work in your favor when making a point, using different time frames and companies in your analysis until you nail down the desired outcome. Take out those factors, and Burrill's numbers still show how pharma companies have felt the pain of the patent cliff in their financials and have also failed on a more speculative score of stock performance. "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, in a statement.

Here are a few of the highlights from Burrill's analysis:

  • Net income of large biotech companies shot up 23.3% over the previous three years compared with a slight 1.1% increase among the Big Pharma crew.

  • Revenue increased 40.6% for large biotech shops to $48.6 billion in the three years through 2012, compared to 17% growth during those years to $526.8 billion for Big Pharma players. (Naturally, the sum of pharma revenue still dwarf those of biotech companies.)

  • Biotech companies took their profits and boosted their R&D spending. Research budgets swelled by 38.8% to $10.3 billion in biotech compared with the more modest 11.7% jump to $76.3 billion among the dozen pharma groups.

- check out Burrill's release