Large-cap biotech is a sector to watch for investors: Analysts
August 31, 2025
Anjalee Khemlani · Senior Reporter
Actualizado 4 min read
Wall Street is looking for new ways to park cash in healthcare names, and large-cap biotechs have begun to gain steam.
This asset class differs from traditional large-cap pharmaceutical companies — typically with a $200 billion market cap or more — such as Johnson & Johnson (JNJ), Pfizer (PFE), and Eli Lilly (LLY). Large-cap biotechs, by comparison, tend to range from $50 billion to $100 billion-plus and have at least $10 billion in revenue.
Biotechs are typically smaller companies working on research and development to help address diseases and tend to focus on more complex medicine platforms using biologics. They’re riskier than their larger counterparts, pharmaceutical companies, which are more diversified and work on various platforms at the same time, including both biologics and synthetic chemicals.
Recent examples include Alnylam (ALNY), which has been on a tear this year and is currently valued at $60 billion, and Vertex (VRTX), which has cooled a bit since last year but still sits above a $100 billion market cap. Alnylam has seen its portfolio of RNA interference (RNAi) treatments for genetic diseases grow in the past few years, with five commercial products on the market and an annual revenue of more than $2 billion in 2024. Vertex dominates the cystic fibrosis market with a portfolio of five treatments, as well as a recent blockbuster to treat sickle cell disease, and boasted $11 billion in revenues in 2024.
Pharma companies often acquire biotechs and, more recently, have been focusing on earlier-stage or smaller companies. That’s because they are facing several headwinds, including Chinese competition and D.C. policy pressure to reduce drug pricing.
This is why Wall Street is finding large-cap biotechs more attractive. There’s just one caveat — the companies have to plan to be sustainable at a large-cap level, and to do so requires a robust pipeline.
Trung Huynh, large-cap pharma analyst at UBS, said these large-cap biotechs could soon be considered in the same league as traditional Big Pharma players.
“The definition of big pharma is definitely broadening. The lines are getting much more blurred between your traditional pharma names and the new set of companies,” he said.
“I think historically, big pharma was really just defined by scale and diversification across different therapeutic areas, and, obviously, very durable cash flow,” Huynh said. “You are definitely seeing some of those biotechs reach … comparable market caps, comparable pipeline depth, comparable global reach.”
Priya Chandran, global sector leader for biopharmaceuticals and US public-sector health practice leader at Boston Consulting Group (BCG), said that for biotechs to grow to Big Pharma level, it depends on each company’s pipeline. Rather than diverse pipelines based on diverse technologies, like traditional Big Pharma players, the biotechs rely more on single-technology pipelines. That means a single type of base chemical compound or delivery mechanism can be used to address different diseases.
“I think it’s just honestly the fundamentals. It’s always sexy to say there’s a new asset class coming. But it’s back to the fundamentals,” Chandran said.
Geoff Meacham, senior pharma analyst at Citi, said there are some companies with fundamentals that are a strong enough platform to lend to potential growth.
One example is CRISPR (CRSP), which has a $4.9 billion market cap and is trading at about $53 per share. The company has one platform and is working on multiple diseases after it succeeded in addressing sickle cell, a blood disease.
“It takes a lot less capital and it’s maybe less risk, so you can scale a little quicker. Versus kind of the old school model where [a company has to] … continue to innovate. That’s just proven to be a little bit more difficult,” Meacham said.
As a result, large-cap biotechs were few and far between in the past. A rush of investment during the pandemic sent many biotech valuations sky-high, but the sector has since recovered.
JPMorgan and Jefferies are among the banks that have separate equity coverage for large-cap biotechs. UBS’s Huynh noted that the fact that the banks have broken out the coverage of large-cap biotechs signals their importance to investors.
According to JPMorgan, the class of large biotechs includes Vertex, but also previously larger stocks like Moderna (MRNA), which has a market cap of $9.7 billion, and BioNTech (BNTX), with a $24 billion market cap, as well as smaller stocks, including Oncolytics (ONCY), with a $94 million market cap, and Incyte (INCY), with a $16 billion market cap.
But the list doesn’t include Alnylam, symbolizing the ever-moving landscape in the large-cap biotech space.
With more big pharma deals in earlier-stage companies and the pressure to invest in China as it becomes more competitive for big players, there is room for more mid-cap biotech companies to grow into larger caps, Meacham said.
So, are large-cap biotechs here to stay?
“There’s not enough Alnylams of the world to call it a trend, but it definitely feels like that’s happening,” Meacham said.
“But it’ll be a full five years before we have a cluster of IPOs,” he added, noting that he hopes to see the start of some activity by next year.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, provider services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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