Between 2021 and 2023, the drugmaking industry experienced mixed fortunes. While the index of American big pharma grew by a third, outpacing the broader stock market thanks to strong sales of blockbuster drugs, the index of smaller biotechnology companies plummeted by roughly the same amount. The biotech sector was weighed down by rising interest rates and waning pandemic-era enthusiasm for all things medical. Unlisted biotech startups found it challenging to secure funding, with investments sliding from $37bn to $17bn in just two years. Fewer startups went public, and more failed during this period.
Despite these challenges, pharmaceutical giants continued to thrive. On April 30th, Eli Lilly reported strong quarterly results for its hit weight-loss treatment. Similarly, on May 2nd, Novo Nordisk was expected to do the same with its anti-obesity drug. The combined value of these two giants jumped from $350bn to $1.2trn in three years. However, there are positive signs for the biotech sector as well, with their overall health improving. This is promising news for investors, patients, and the pharmaceutical industry as a whole.
