Small Companies Gain Ground

Even before the frenzied growth unleashed by the pandemic, small to midsize biotechs had been gaining ground on their larger competitors, thanks in part to their nimbler adoption of new technologies, faster paced innovation, and partnerships with larger companies hoping to overcome internal stagnation and offset impending patent expirations.

As shown in Figure 1, EY 2 reports that new molecular entity (NME) approvals attributed to small biotechs with revenues less than $1 billion were around 10% in 2017. By 2021, their share had grown to 30%. McKinsey & Company3 reports the pace of innovation has also been increasing, with assets passing through early phase trials up to 50% faster than in previous years, though the development of later stage assets has remained flat. They project that innovation will continue to blossom as biological science advances and companies adopt new technologies, such as artificial intelligence.