Introduction to the Pharmaceutical and Biotech Industries

Strictly speaking, the term "pharmaceuticals" refers to medicines composed of small, synthetically produced molecules, which are sold by large, fully integrated drug manufacturers. The largest of these players -- companies like Pfizer, GlaxoSmithKline and Merck -- as well as a handful of others are referred to as "Big Pharma" because they are huge research, development, and manufacturing concerns with subsidiaries all over the globe. Indeed, Big Pharma is where over 50% of the industry's sales are generated. Big Pharma is responsible for all those television commercials urging us to contact our doctors if we suspect we suffer from acid reflux disease or social anxiety disorder. Yet despite life-saving, cancer-fighting drugs and significant corporate philanthropy, Big Pharma's recent product recalls and safety testing troubles (Vioxx and Celebrex) have made it the industry many have come to love to hate.

Before we help you chart a marketing career in the industry, we should point out that both the scope of players and the types of products the industry produces are moving targets. This is because the pharmaceutical and biotech industries are gradually integrating into one biopharmaceutical industry. Here's what you should know about this dynamic restructuring.

"Fully integrated"

Most biotechs are small research-oriented companies dedicated to applying genetics to curing a multitude of diseases, from Alzheimer's to multiple sclerosis. A handful of companies -- such as Amgen, Genentech and Chiron -- have broken through the rest of the pack to become "fully integrated" like their Big Pharma cousins. The term "fully integrated" means that they manufacture as well as sell their own products. These "products" are proteins, which need to be administered via injections, since they are very large molecules compared to the synthetic molecules Big Pharma sells. The largest biotechs are actually mid-size pharmaceutical companies in the way they function and are sometimes called "Big Biotech."

As for the largest Big Pharma players, most are either gobbling up small biotechs through outright acquisitions or, alternatively, are entering licensing agreements. This has been happening over the last decade, and is likely to continue throughout the rest of this decade, since it is increasingly difficult to find innovative new drugs through traditional science. In fact, innovation is the industry's biggest current challenge. Companies are using acquisitions and alliances to round out their product pipelines and meet investor expectations. Big drug manufacturers can now claim to research, manufacture and sell both types of drugs: synthetic small molecules (or old chemistry) and injectable large molecules (or biologics). What this means to you is that you should include the largest biotechs as well as the largest traditional pharmaceuticals in your plans when thinking about a marketing career. And this is good news since it increases the number of players and potential employers.

Organizational structures

Pharmaceutical companies are generally organized around the "blockbuster" model, i.e., they derive most of their sales and profits from a handful of broadly acting drugs, which are mass-marketed to a broad patient population by a network of sales representatives, or "detail" people. This is the same model that brought Vioxx to the market and it is increasingly under attack. By industry consensus, a "blockbuster" is a drug whose annual revenues reach or exceed $1 billion.

The biotech firms, on the other hand, tend to be organized around smaller franchises, i.e., their products are targeted to small patient populations with rare genetic diseases. Their biologics are sold by specialty sales representatives, who often have a relatively high degree of scientific knowledge. Because of this focus, biotech products are often referred to as specialty pharmaceuticals. To complicate matters, some biologics reach blockbuster status with respect to their revenues, since they are usually much more expensive than synthetics. Considering that some biologics cost $10,000 per patient per year, you would need a mere 100,000 patients to reach $1 billion in revenues. Compare this to the millions of patients who ingest small molecule drugs like Prozac or Viagra.

Introducing "biopharma"

The dividing line between the pharma and biotech industries will continue to blur. That leaves us with the problem of how to refer to the emerging industry. We'll be using the term "Biopharma" to include both types of products. As it turns out, most companies require some experience in pharma sales before permitting someone to move into specialty sales. That's a significant factor in charting your career. Both Big Pharma companies as well as biotechs can have specialty products. The distinction is that biotech products are exclusively specialty products, whereas Big Pharma -- which has a broader product offering -- has products targeted at primary care physicians and products aimed at specialists.

One final comment about the industry's products: both synthetic or biologic drugs are directed toward the treatment of disease. The industry refers to this broad category as therapeutics,' since these drugs have a therapeutic effect on the disease condition. But the biopharma industry also has another category of products focused on helping medical scientists more accurately determine (or diagnose) a disease condition from a patient presenting multiple, often difficult-to-interpret symptoms. These products are called diagnostics' and may come from biologic sources. Often, diagnostic agents (they are NOT called drugs) are used in conjunction with a medical device or instrument. A good example is the diagnostic imaging agent technetium 99m, which helps MRI machines create clearer cross-sections of the human body.