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The Difference Between Biotech and Pharma Companies

When I began this job a few months ago I found myself hearing the words pharmaceutical and biotech quite often. I myself am not a science person by any means, so these words didn’t mean too much to me.  I knew that they referred to companies that deal with drugs, but that was the extent of it, I really, barely knew anything more about them.  I decided today that I was going to find out what those companies are doing and the difference, if any, between the two.

So, I began my search and these are the two definitions I came across:

  • Biotech Companies: a company whose products or services primarily use biotechnology methods for their production, design or delivery. a company that uses live organisms or their products, such as bacteria or enzymes, to manufacture drugs.
  • Pharmaceutical Companies: a company that researches, develops, tests, manufactures, and/or sells medical drugs or devices. a commercial business licensed to research, develop, market and/or distribute drugs, most commonly in the context of healthcare.

Unfortunately, these definitions are rather bland and make the two company types sound very similar. So, are Biotech and Pharmaceutical companies the same thing?  Maybe not…  I have compiled a differences chart to help paint a clearer picture about the two types of companies:

Pharmaceutical Biotech
Size Large to middle sized Small start-up
Business Model Large business Small business
Development Process Empirical screening Genetic engineering
Basis of Research Plants, microbes, and organisms RNA, DNA, Amino Acids, and hormones
Specialty Drug refinement Drug discovery
Financing Shareholders Private investors
Business Approach Low risk High risk

Recent speculation among industry experts states that there is no clear distinction between the two types of companies.  However, my research proves otherwise. Biotechnology and pharmaceutical companies both produce medicines, but the medicines made by biotechnology companies are derived from living organisms while those made by pharmaceutical companies generally have a chemical basis. Biotech companies are typically developing large molecule drugs and have novel intellectual property or some new technology that make for an attractive pipeline to develop into a commercially viable product, but usually not the scale in sales and marketing to make this happen. Working with plant and chemical based compounds, pharmaceutical companies work their magic to make medicines that cure or manage diseases, and protect us from infection.




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