| There seems to be a lot of confusion in the | | | | can be a pharmaceutical company. |
| investment community and press about what a | | | | A pharmaceutical company should be any company |
| biotechnology company is and what a pharmaceutical | | | | that has a drug approved for the sale and use in |
| company is. This can be important for many reasons | | | | treating a disease or condition by the Food and Drug |
| including what the perceived value of the company is. | | | | Administration ("FDA"), European Medicines Agency |
| It seems that this should not really make a | | | | ("EMEA") or other similar regulatory body. Whether a |
| difference but that a company's financial statements, | | | | pharmaceutical company used recombinant DNA |
| size of the addressable market of the proposed drug | | | | process versus chemical synthesis should be |
| and potential growth of the company should really | | | | irrelevant for determining whether it is a |
| govern the company's market capitalization. | | | | pharmaceutical company. However, it is relevant for |
| In an effort to simplify the difference between what | | | | determining whether a company is or is not a |
| a biotechnology and a pharmaceutical company often | | | | biotechnology company. If a company has an |
| the process for manufacturing the drug or | | | | approved product or is still developing a drug, it can |
| therapeutic agent seems to be the standard proxy. | | | | be a biotechnology company as long as it is using a |
| The most common what to characterize whether a | | | | biotechnology process such as recombinant DNA to |
| company is a biotechnology company or a | | | | develop its drugs. They are not mutually exclusive in |
| pharmaceutical company is if recombinant DNA is | | | | the characterization of a company that develops or |
| used as the process for manufacture of a drug | | | | markets drugs. |
| candidate versus using a chemistry process to | | | | It is better to characterize companies that have |
| synthesis the drug candidate. This is an | | | | drugs approved for treating a condition or disease as |
| oversimplification. A biotechnology company can also | | | | a pharmaceutical company. There are huge |
| be a pharmaceutical company but a pharmaceutical | | | | companies with significant revenues such as Biogen |
| company may not always be a biotechnology | | | | Idec, Amgen, and Genetech whose products are |
| company. | | | | based on the biotechnology process that are both |
| Generally, the press, the investment community and | | | | biotechnology companies and pharmaceutical |
| the most common classification systems for | | | | companies. But there are others that have drugs |
| characterizing what industry a company developing | | | | solely based on chemical synthesis that are not |
| drugs is in tends to classify all companies as a | | | | biotechnology companies. Clarifying this would reduce |
| biotechnology companies based on whether or not | | | | a great deal of confusion in the investment |
| they drug development process is based on use of | | | | community and may lead to more rational valuations |
| recombinant DNA rather than chemical synthesis. This | | | | that are based solely on financial statement and |
| categorization is not necessarily mutually exclusive | | | | revenue growth rather than the belief that |
| and leads to confusion for potential investors. It also | | | | biotechnology companies are doing something unique |
| leads to poor taxonomies and descriptions of what a | | | | and merit a higher valuations. |
| biotechnology company is. A biotechnology company | | | | |