There are three types of pharma companies.
Devlopment stage
Small
and Large .
Development stage pharma companies are cash burners with no revenue and no product and the companies running on dream. That is on the expectation of making it big by coming out with a product and selling them. We can call these companies as dreamer companies and the talk is more about future than what they have now. This is like a start up company. Start up companies may at least have product. But these companies don't have any product yet.
Small pharma companies may have revenue or expecting revenues. These companies may have one or two approved products and in sales or ready to sell. These may also have some or many in the pipeline on various stages. These companies are starting to realize their dream and hope companies.
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Development pharma
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Small pharma
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Large pharma
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Source of funds
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Mostly venture capital funded and recently listed in the exchange |
Venture capital, Institutional investors, partial acquisitions by
big pharma, new issue of shares
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Institutional investors, new share issues
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Revenue
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No revenue, Cash burners |
Licensing agreements, collaborative drug development, marketing
agreements, product sales
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Licensing agreements, collaboration, JV, product sales, marketing
agreements, patent royalties,
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P/E
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Difficult to calculate |
large P/E
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As expected of pharma
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EPS
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None |
Makes no sense
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As expected of pharma
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Market cap
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Few tens of millions to hundreds of Mill |
Upto few billions
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Tens of billions
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Brand(s)
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No Brand yet |
Getting establish
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Established
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Visibility
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No analyst coverage |
One or two
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Good coverage
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Investing risk
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very very high |
Very High to high
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As expected in pharma
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Returns
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extra ordinary |
Superlative
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As expected in pharma
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Pharma knowledge needed
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Familiarity with pharma |
Understanding of pharma
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Regular investing knowledge
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Information
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Only whatever company provides |
Few financial sites, company
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Many media, analyst articles, finace sites like google, yahoo, money
control
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Behavior
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Move huge on news |
Move huge on news
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Typical behavior
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Positive news items
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Phase 2 success and NDA filing, FDA approval, Buy out |
Buy out, Marketing agreement, FDA approval, Sales target achievements
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FDA approval of new drug, M&A, favorable Government regulation.
, expansion in new geography, new blockbuster drug, market share
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Negative news items
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Drug failure, Cash burn out |
failure of drug sales, cash burn, no partner, drug failure in pipeline
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FDA inspections and warning letters, Dwindling main drug sales, patent
expiry, competitive drug indroduction, no new drugs in pipeline
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