Stealth Pharmas

Apr 01, 2007

Not Big Pharma
Ever wonder how all those biotechs, specialty shops, and generics that make up Not Big Pharma ever manage to stay in business? Pharm Exec asked Bill Trombetta of St. Joseph's University to look at their books, analyzing their financial performance with the same metrics he uses for our annual Industry Audit. His findings may surprise you. In fact, when you check the bottom line, you just might consider changing teams.

Legend has it that F. Scott Fitzgerald and Ernest Hemingway were once trading boozy barbs when the fatally romantic Fitzgerald observed, "The rich are different from you and me." "Yes," the suicidally cynical Hemingway answered. "They have more money."

The Big Picture

And so it is with Big Pharma. Big Pharma is different from the thousands of biotechs, specialty pharmas, generics makers, and other companies that make up what we call, for lack of a better term, Not Big Pharma. Yes, they have more money. But in what other ways are they different? And can we learn anything from the way Not Big Pharma competes?


First, let's dignify them with an identity of their own. I call them "Stealth Pharmas" because they fly under the radar: Everyone knows who these companies are, but no one has ever rounded them up and analyzed how they compete in comparison to the big guys. As a category, Stealth Pharma simply encompasses everything that is not Big Pharma: biotechs, specialty pharmas, generic firms, diagnostics, and drug-delivery firms. As individual companies, they grow increasingly difficult to label: Many started out as a biotech or a generic-drug maker but, by seizing opportunities, have morphed into hybrid entities. Call them wild cards.

Enterprise Value


I made a random selection of 15 that fit my two criteria: They had to be, to some extent, in the public eye, covered in the pharmaceutical trade journals and business press, and they had to have made a profit in 2005—which, of course, narrowed the selection considerably. But there is no attempt here to measure, compare, and score performance to come up with a winner or even a ranking of the "Stealth 15" (as we do in the annual "Industry Strategic Audit" every September in Pharmaceutical Executive). Our aim is much more modest: how do these 15 shadow pharmas stack up against Big Pharma?

Let's begin.

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