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Differences Between Biotech and Pharmaceuticals

It is true that a shared primary focus of both Biotechnology and Pharmaceutical companies is to produce medicine and improve global health. However, the main difference is that companies in the Biotechnology space try to derive medicine from living organism whereas Pharmaceuticals companies make medicine from the chemical basis. Both types of companies are recognized making extensive research and develop new drugs. The main differences between Biotech and Pharmaceuticals are as follows.


Biotech is based on biology. Using technology that uses organisms and living systems can be termed as biotechnology.  For example, in an earlier time, many farmers use a type of biotechnology for producing food and breeding crops. However, biotech has grown it’s applications in many areas like improving manufacturing and treating disease. Biotechnology companies are collectively known as biotech.

The industry started to improve drastically after the identification and sourcing of DNA. Making biofuels like ethanol, developing pest-resistant crops and gene cloning are some of the important milestones for the biotech industry.

Biotechnology therapies or biologics are the use of biomolecular processes, harnessing cellular and biology. The industry comprises of allergenics, somatic cells, tissues, vaccines, recombinant therapeutic proteins and tissues.

Biotechnology therapies are also known as biologics. Biotech is either comprised of nucleic acids, sugars, proteins or any complex substance that is made of these substances or they may be living entities for instances tissues and cells.

This industry is a gene-based and cellular biologics and often placed at the frontline of biomedical research. There are many instances where biotech is used for the treatment of many diseases for which no type of treatments are obtainable. For example, gene therapy may be able to cure some complex diseases like cancer.

Three years ago, Novartis’ CAR-T (chimeric antigen receptor) therapy Kymriah was selected for the treatment of pediatric B-cell acute lymphoblastic leukemia. This is a perfect example of how CAR-T therapy can be helpful in the treatment process of leukemia cells. The therapy removes T-cells from a patient. Then, it modifies these T-cells to include a new gene that comprises a specific CAR. After that, the specific CAR is directed to target and kill the leukemia cells. However, the therapy works for patients up to 25 years old.

According to FDA Commissioner Scott Gottlieb, this new technology can be used a new frontier in medical innovation to reprogram own a patient’s cells to kill cancer cells. This industry often finds obstacle from governments and many more organizations as new products can come with threats sometimes. For example, many countries don’t allow genetically modified products and plants. 

Novo Nordisk, CSL, Amgen Inc. and Gilead Sciences are some top biotechnology firms in the US. These companies generally have a very high operating cost. The reason is biotechnology companies are involved in the development, extensive research and testing. These processes take years to complete. Moreover, the result can be an utter failure at the end. Hence, investing in these companies has high risk-reward ration.   


Pharmaceuticals Companies develop and market medicines after researching on artificial sources. Bayer AG, Johnson & Johnson, Merck, Novartis are some top pharmaceuticals companies. The development process of pharma medicines can take a long time before finally launching in the market. The approval process of the Food and Drug Administration (FDA) also takes a long time.

Alongside selling current products, these companies also make research for new products. These companies always keep a sturdy pipeline of new products through R&D sections. Hence, big pharma companies have steady revenue from current products.

Pharma companies due to a larger size and diversified product base can withstand the challenge of failure of researches of new medicine. For this reason, investing in pharma companies is less risky than investing in Biotech companies. However, new pharma companies are always a threat to pharma companies.

As mentioned before, the pharma companies use artificial sources to make new medicines. In the process, these companies test their new products through empirical screening. There is no use of genetic engineering in the pharmaceutical industry.

Pharmaceutical companies mainly use plant and chemical-based compound to cure or manage disease or protect us from infections. Biopharma industry seeks help from the researches of the biotech industry. Some pharma companies also develop livestock feed supplements, vitamins, animal health products etc. P

harma companies adopt two ways to develop new products. These companies conduct extensive research in-house or seek to license promising drugs from other pharmaceuticals, academia or biotech companies.

Differences in Business Model

As mentioned before, the Biotech industry needs huge cost of finding a new product. However, there is one factor that can make up the cost disadvantage. The industry can get patent protection for 12 years, whereas pharma companies generally get exclusive rights for patent protection for five years.

The biotech companies are largely dependent on fundraising for developing products from new ideas. That’s’ why their marketing process is different from the pharma companies. A biotech company needs to sell ideas to the investors at first. For this reason, initialization of any biotech project is much more complex than initialization of a project of developing pharma product. This results in many promising biotech companies unfunded where this is very rare to the pharma companies. 

Biotech companies are more focused and invest in their research programs as they are still developing their initial products. For this reason, these companies prefer to locate around prominent research universities. However, for huge cost in researching and set-up process, the loss of small biotech companies can be un-recoverable and damaging. 


The biggest product introduction is biopharma drugs. The industry is a subset of the pharmaceutical industry. However, these drugs result from biotech research or process. These medicines and drug products are manufactured in living organisms like mammalian cells and bacteria. A few examples of biopharma drugs or biotechnology medical products are as follows.

  1. For slowing the growth of tumors in many types of cancer, biopharma drug named Roche’s Rituxan is used.
  2. For the treatment of diseases like psoriasis, arthritis and Crohn, biopharma drug named AbbVie’s Humira is used.
  3. For the treatment of several autoimmune diseases, Amgen/Pfizer’s Enbrel is used.

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