In 2003, BioPharma accounted for nearly a quarter of the market cap within the world’s 20 most valuable companies. Today, BioPharma makes up only 5% of the top 20. Here are some driving causes of this change:

BioPharma has grown in absolute terms, but in relative terms, it has been outpaced by other sectors, particularly tech.

In 2003, 5 of the world’s 20 most valuable companies were BioPharma ones, and they were worth a combined $700B. By 2014, it had dropped slightly to 4 companies, and by 2024, it was only 2, although those 2 are worth a combined $1.3 trillion

Still, the overall BioPharma market is huge - with global prescription medicine spending last year exceeding $1 trillion according to an IQVIA analysis.

While the overall BioPharma market remains large, tech companies tend to have higher market shares within their specific niches, and can maintain that market share more durably. For example, Google’s market share in search has hovered around 80% for several years.

This hallmark of tech giants is in contrast with BioPharma, where companies face constant patent cliffs, higher development costs (each new drug costs ~$2B+ to develop), slower time frames, and lower profit margins.

Amid this shifting landscape, how BioPharma adapts to these challenges might indicate whether the industry can reclaim a more substantial share of the market cap among the world’s most valuable companies.
Source: Arjun Murthy’s LinkedIn Post