By Sy Mukherjee
April 23, 2019

Good afternoon, readers.

Big pharma companies are in an ROI rut. But that doesn’t mean drug developers at large are grappling with a midlife crisis. In fact, the young guns of the industry—upstart biotechs—aren’t doing too shabby, according to a new Iqvia Institute report.

There have been a few notable shifts in drug development culture as legacy, big-name biopharmas struggle to maintain their ROI of old. Leaner, meaner biotechs have climbed the investor hype ladder while attracting buyout offers from the industry titans (see: any of the deals for startup gene therapy and cancer immunotherapy treatments in just the past few years).

“Emerging biopharma companies (EBP) are defined as companies that are estimated to spend less than $200 million annually on R&D and have less than $500 million in revenue,” wrote the study authors. And these companies accounted for “72% of the total [drug] R&D pipeline in 2018, compared with 61% in 2008… Large pharma companies—those with more than $10 billion in annual pharmaceutical sales—have seen their share drop from 31% to 20% over the same period.”

Let’s put an even finer point on the issue: “Emerging biopharma companies were the originator of 38 of the [new active drug compounds] launched in 2018, or 64% of them.”

This isn’t to say the mainstays of the drug industry have nothing to offer anymore—after all, they can douse the up-and-coming biotechs with cash to help them conduct clinical trials and commercialize their products. But their central roles as the original innovators in this admittedly risky space has clearly diminished. And that may foretell even greater shifts in the pharma business landscape.

Read on for the day’s news.

Sy Mukherjee
@the_sy_guy
sayak.mukherjee@fortune.com

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