Goldman Sachs – Pharma Versus Biotech Valuation

Goldman Sachs put out a new research report this week which asks the question “pharma versus biotech: which is cheaper?”

Since the start of the great healthcare bull run, which began during 2011, healthcare earnings multiples have risen from 12 times earnings, to 17.6 times earnings and the sector now trades at a slight premium to the S&P 500. The S&P 500 trades at a P/E of 17 according to Goldman’s data.

But not all healthcare sectors are created equal. For example, at the bottom of the scale, the managed care sector trades at a P/E of 16.6. While at the other end of the scale, the medical tools sector trades at a P/E of 22.5.

And since 2011,...