Monday, March 27

Buying pharmaceutical and biotech stocks: Investors should know this by now

pharmaceutical industry? biopharmaceutical industry? biotech industry?

All companies in these industries make medicines. It has now become relatively difficult to differentiate between the individual sectors. The reason is relatively simple: while just a few decades ago pharmaceutical companies produced their products exclusively chemically and biotech companies produced medicines biotechnologically (e.g. with the help of living organisms such as bacteria), these development methods have now mixed up.

The pharmaceutical industry broadened its “portfolio” with acquisitions of biotech companies and restructuring of its own research and development. As a result, pharmaceutical companies such as Novartis, Pfizer, Roche and Sanofi are among the largest drug manufacturers in the world.

Today, companies that exclusively develop and manufacture biological pharmaceuticals are referred to as biopharmaceutical companies. Companies that manufacture chemically and biologically developed drugs are among the classic pharmaceutical companies. The biotech industry includes companies that work biotechnologically, but not pharmaceutically.

But how can you, as an investor, tell the difference? Dividend payments are often an indication. While pharmaceutical companies usually pay profit sharing, they are (still) the exception for biopharmaceutical companies.