When is big pharma no longer big pharma?

A lot of time is spent, in the various corners of the biopharma industry, comparing the relative performance of drug makers. Companies are placed in peer groups to make those comparisons as fair as possible – but on what basis should those peer groups be built?

Take “big pharma”, which according to Evaluate Vantage’s definition makes up an 11-company cohort, highlighted in the table below. This was constructed many years ago based on market cap and the diversified nature, in terms of therapy areas addressed, of each business. Considering recent shifts in strategy and valuations, does the big pharma group need a shake-up?

GSK’s stock market decline has prompted this question. The company became smaller after spinning out its consumer division earlier this year, but its valuation has also been hit by a series of pipeline blow-ups and the threat of Zantac litigation. All of this means that 17 global drug makers now have larger market caps.