Pharma’s reputation isn’t doing so great. Hot-button issues like drug pricing have chipped away at the industry’s image in the eyes of the public and potential investors. An opioid epidemic and medical misinformation have eroded trust. And in biotech, one failed study can tear down an up-and-coming company.
How can biotechs in particular overcome the negativity swirling around the industry? Surveys have shown that corporate reputation has a strong correlation with financial success across sectors, and drugmakers looking to succeed based on safety and efficacy need to be vigilant with regard to their own name and the industry as a whole.
Instead of reacting to individual crises or relying on an outdated news cycle, Waterhouse Brands founder, CEO and chief brand strategist Kim Kraemer suggests pharma and biotech companies engage in “reputational pull” to put their best foot forward on a consistent basis.
“Reputational pull is a way to think about the impact reputation can have for a company, specifically to its valuation and how it shows up in the market,” Kraemer said. “I would define it as a feeling — it’s that feeling when investors want in, when talented employees want to work with you, and when partners believe deeply in your mission and want to be part of your success story.”
The concept comes from a more general psychological and behavioral framework outlined in a 2023 scientific article, but can apply to drugmakers. Making reputation part of a clear-cut strategy to attract investors and repel unwanted attention before it arrives puts companies in the driver’s seat, she said.
“Companies often think about reputation as something to manage by press release or infrequent engagement with the market,” Kraemer said. “Reputational pull, on the other hand, creates a magnetic force that attracts people, as opposed to the legacy model of trying to do things in isolation.”
Biotech executives need to be precise in their efforts to keep their reputation intact, she said.
“We should flip the script, and that starts with the board and leaders having a clear end goal in mind,” Kraemer said. “The opportunity here is to shift our approach from being reactive to being proactive.”
A fading shine
While the drugmaking industry suffers overall from a poor public perception, biotech companies tend to leave a more favorable taste than their Big Pharma counterparts. A quick response to the COVID-19 pandemic made innovative companies like Moderna and BioNTech industry darlings, even if anti-vaccine sentiment rose at the same time. Pharma companies, on the other hand, can never quite get over the pricing hill, despite funding a good deal of that innovation.
“When it comes to pharma and biotech, it’s important to look at reputation through the lens of sentiment and perception,” Kraemer said. “Pharma’s reputation has largely been colored by pricing, access and reimbursement issues, whereas biotech has historically been recognized as a science-driven, patient-first, breakthrough innovation sector of healthcare with a positive patina associated with it.”
“The biggest challenge to reputation for biotech companies is their ability to deliver on the promises and expectations they set for investors."
Kim Kraemer
Founder, CEO, chief brand strategist, Waterhouse Brands
In a post-pandemic era, though, biotechs are seeing some of that lustre fade. With the sector poised to celebrate 50 years in action — since the 1976 launch of Genentech, considered the first biotech company — a once-stellar perception has begun to shift.
“Biotechs are more perceived as transactional and being led toward the exit rather than being driven to create the next great biotech company,” Kraemer said.
Between the M&A churn and an uncertain future for science funding in the U.S., the pharma and biotech industries need to be clear about the direction they’re headed and what investors and the public at large expect them to be, Kraemer said.
“From a market standpoint, when you look at what fuels innovation, it’s policy, government and VC funding, and the talent pipeline,” Kraemer said. “With so much uncertainty and chaos in today’s environment, it calls into question what this industry will become, how it will adapt, survive and thrive.”
Companies with specific issues giving them reputational trouble — like cell therapy makers getting treatments to patients in a timely manner — need to confront those issues first.
“For companies looking to deliver on the promise of a new technology and overcome skepticism or misperception, they have to first understand it and demonstrate that they’re willing to tackle issues,” Kraemer said. “For cell therapy, those can be issues like the vein-to-vein timeline, quality standards in manufacturing and the provider and patient experience.”
Bigger challenges still overshadow the industry’s positive impact, though.
“From a scientific perspective, everybody is rooting for biotech because they know the impact of medical innovation in changing lives,” Kraemer said. “But until issues like pricing, PBMs and healthcare policies are resolved, it’s going to be hard to shift investor and consumer attention to the real impact.”
A biotech turnaround
Corporate reputation comes in many forms. While a public image can be tarnished in many ways, investor standing can be the most costly. In biopharma, where data is king and development is pricey and time-consuming, companies can take a hit from a study going sideways.
Kraemer points to Exelixis, which in 2014 suffered a late-stage clinical trial failure in prostate cancer with its lead drug candidate Cometriq. Combined with a quickly fading cash runway, the study disaster caused the company’s stock to tank, forcing leaders to cut 70% of the workforce.
Now, Exelixis has regained its reputation among investors through the drug Cabometyx, which has picked up several cancer indications, as well as a partnership with Genentech and a growth trajectory that raised annual sales forecasts to $2.25 billion in 2025.
How did Exelixis pull out of the downward spiral? By rebuilding in an area “where they could ultimately play and win,” Kraemer said. After hitting rock bottom, the company refocused on oncology, “playing the long game … and putting a stake in the ground around cancer,” she said.
Exelixis CEO Michael Morissey also sought to establish a resilient culture through careful leadership and reframing of the company’s vision, said Kraemer, who advised the company during that time. This helped bolster Exelixis in the minds of investors, as well.
“The biggest challenge to reputation for biotech companies is their ability to deliver on the promises and expectations they set for investors,” Kraemer said. “They need to demonstrate that they have the team and the strategy and the opportunity to execute, to set clear expectations and meet milestones.”
Reputation comes down to much more than an apology for wrongdoing or moving the goalpost on a missed shot.
“Reputation is not just what a company says,” Kraemer said, “but what a company ultimately does.”
