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Economic Profitability of the Biopharmaceutical Industry

Richard Manning, PhD, and Saurav Karki, MBA, CFA
September 2018, with appendix (updated April 2019)
Read the brief here

In this policy brief, Partner Richard Manning and Manager Saurav Karki examine how the biopharmaceutical industry’s economic value added (EVA) spread compares with that of other industries. The paper discusses how this industry’s EVA spread has changed over time and includes illustrations of trends for EVA spread for other industries. It reviews a measure of economic performance that adjusts for risks borne by investors and the varying capital costs associated with different types of investments across industries. Dr. Manning and Mr. Karki find that the biopharmaceutical industry’s economic profits are in line with those of all industries.

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