Biotech vs pharma: Differences and similarities

To laypeople, the words “biotech” and “pharma” might seem interchangeable. But when you understand the difference between biotech vs. pharma, you can better understand news about the life science industry (such as vaccines, new drugs, and other products) and the life science marketplace.

For example, when the public thinks of a company that works to create advances in healthcare, they probably envision the giants like Pfizer, Johnson & Johnson or Eli Lilly. But in reality, the life sciences field is broken up into a number of smaller industries in which biotech and pharma startups and small companies can thrive.

Typically, those more recognized companies are in the pharmaceutical industry, while smaller companies are developing biotech products. However, there's a great deal of overlap as those aforementioned giants have branches in both biotech and pharma. This makes sense, because both biotech and pharma companies create products for healthcare, but the difference lies in the methods each uses to develop the healthcare solutions.

To better understand the distinctions between these life sciences disciplines, we'll compare biotech vs. pharma companies and dive into their unique differences.

What is a biotech company?

Biotech companies work to develop products using live material, such as cells to solve various issues. For example, they use biotechnology, or technology based on biology, to provide the framework needed to create gene therapy, monoclonal antibodies, vaccines, and other biologics to treat illnesses and diseases.

Along those lines, while it is more common to think biotech is only associated with healthcare, biotechnology is actually used in many other industries to solve a wide array of problems. Take Pivot Bio a biotech company that developed a more sustainable, safer fertilizer for farmers to use on their crops that provides nutrients without the effects of synthetic fertilization.

The main branches of biotechnology include:

  • Animal: Genetically engineering animals, usually for the purpose of making them better suited for commercial purposes, such as cows that produce more milk.

  • Medical: Creating medical treatments, working with large scale production of medicines, i.e. human insulin, developing vaccines for chickenpox, COVID-19, and other illnesses, as well as developing diagnostic tests for various diseases.

  • Industrial: Involving the commercial production of organic compounds like acetic acid and glycerine and manufacturing antibiotics like penicillin.

  • Environmental: Using biotech to study ways to restore the environment like reducing waste, treating sewage water, controlling insect diseases, and much more.

  • Plant: Using genetically modified plants to either increase crop yield or to develop resistance to plant stressors

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What is a pharmaceutical company?

A pharmaceutical company typically uses materials derived from chemical compounds and uses those compounds to manufacture new drugs to treat illnesses, diseases and other medical issues. The company may develop, research and/or distribute its own products.

Aside from methodology, the primary difference between biotech vs. pharma companies is that pharmaceutical companies generally have a more narrow focus on healthcare. They may not necessarily work with biotech companies to reach their desired goals, but they often do. Since they tend to be larger in size, they can do the research that smaller biotech companies do or even buy their research from them.

Biotech vs. pharma: The similarities

Biotech and pharma often overlap since both industries work to find ways to improve human (and animal) health, and both produce medicines. These two industries often merge in the form of biopharmaceutical companies, which played a huge role in developing the mRNA vaccine that is currently used to lessen the effects of the COVID-19 virus. The majority of mRNA vaccines in development now are with biopharma companies across the world.

Pharma vs. Biotech: FDA approvals and regulations

Both biotech and pharma companies must adhere to strict FDA regulations, but their products have different paths to getting approval.

Pharma FDA approvals

Typically, the synthetic drugs produced by pharma companies are approved via a new drug application (NDA) through the FDA’s Center for Drug Evaluation and Research (CDER). NDA documentation requires data from any animal study or human clinical trial. The research done in the preclinical and clinical phases should show that the proposed medicine’s safety and efficacy were evaluated. Also, documentation in the NDA should display any information related to manufacturing, product labels, and the quality assurance process.

Only a small amount of compounds that are considered for humans are approved, according to Science Daily. Each must go through extensive rounds of preclinicals, clinical trials, and safety and quality monitoring. Typically, it takes several years for pharmaceutical products to reach FDA approval because of all the testing required. In some cases, however, like the COVID-19 vaccine, approval can be expedited.

Biotech FDA approvals

Biotech products generally require a BLA (Biologics License Application) to be submitted and approved by Center for Biologics Evaluations and Research (CBER) to introduce or deliver biologics into interstate commerce, which would include mRNA vaccines and blood products, as examples. The BLA application requires similar information to NDA, proving the medicine’s safety and efficacy, as well as manufacturing and label information.

Both traditional pharma and biopharma companies will continue to grow since each type of medicine is used for different conditions. But since biotech is a newer industry with more room to grow, it's currently expanding much quicker than established pharma companies. From 2019 to 2020, the biotech sector saw double-digit annual growth due to the pandemic, according to McKinsey. And biotech sees new companies emerge on a daily basis.

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The future of biotech and pharma

Going forward, the line between biotech and pharma companies will become even fuzzier as they partner to develop new treatments. For example, Johnson & Johnson and Allogene are working together on cell therapies for cancer. Other big items on the horizon for biotech and pharma include:

  • Gene therapy: Newer techniques like genomic editing place molecular therapies directly into cells to activate genes that fight diseases or to turn off genes that aren’t working correctly. The technique is being used to fight diseases like spinal muscular atrophy.

  • Further mRNA vaccine development: After the development of the COVID-19 vaccine, there are other mRNA vaccines in the works for viruses like the flu and even HIV, according to Johns Hopkins.

  • Monoclonal antibody development: These are used in many cases but most recently made the news for their ability to treat COVID-19 infections. In February 2022, the U.S. federal government purchased 600,000 new treatments that seem to work against the Omicron variant.

Starting a biotech or pharma company?

If you’re considering starting a biotech or a pharmaceutical company, know that they are both highly competitive and regulated industries. However, options are available to help lower the barriers to entry, such as incubators where startups can do research with minimal overhead.

Industry software like quality management systems are also making these growing fields less intimidating for newcomers. When smaller companies have access to these tools and resources, they can streamline some of the more tedious regulatory aspects to help them in obtaining FDA approval for their respective medical solutions.

Need to choose an eQMS? Get a demo of Qualio and start building your life sciences company.