Mapping the biotech and medtech board: who holds which pieces

Tracing the insulin pen

Who makes the molecule

Insulin is a near-oligopoly. Three companies (Novo Nordisk, Eli Lilly, and Sanofi) supply the overwhelming majority of the world's insulin (commonly cited as roughly 90%, estimate). That concentration is a power fact: with three players, price competition has historically been limited, and biosimilar entry (a copycat version of a biologic drug) has been slow and expensive to develop.

Who makes the device

The pen itself, the injector mechanism, is often designed with or manufactured by device specialists like Ypsomed or SHL Medical. So even a "pharma" product has a medtech supplier embedded in it. The brand owner controls the molecule and the label; the pen supplier controls a critical piece of the delivery experience and holds real leverage during patent cliffs when device design can extend a franchise.

Who moves the money

Here is where value leaks away from the manufacturer. In the US, three wholesalers (McKesson, Cencora, formerly AmerisourceBergen, and Cardinal Health) distribute the vast majority of drugs. They take a margin for logistics.

Then the PBM sits between the manufacturer and the insurer. The manufacturer sets a high list price, then pays the PBM a rebate (a retroactive discount) to win favorable formulary placement (the insurer's list of covered drugs). The net price the manufacturer actually keeps can be far below list.

A simplified worked example (illustrative numbers, not a real contract):

The patient may still pay based on the $300 list price if they have a high deductible, while the manufacturer nets $110 and the PBM captures value from the $150 spread. This gap between list and net is the single most important dynamic in US pharma economics.

For the mechanics of how rebates and formularies actually work, the Commonwealth Fund has a clear free explainer: How Pharmacy Benefit Managers Work.

Europe is a different board

In most of Europe, a national payer negotiates directly. In the UK, NICE (the National Institute for Health and Care Excellence) assesses whether a drug is cost-effective before the NHS pays for it. Germany's system (via the IQWiG assessment and G-BA body) sets prices after a benefit assessment. There is no PBM layer capturing rebate spreads the way there is in the US. Result: European list prices for insulin are far lower, and the middleman margin pool is much thinner.

Tracing the oncology drug

Who makes it

Oncology is dominated by Big Pharma (Roche, Merck, Bristol Myers Squibb, AstraZeneca, Pfizer) plus a wave of biotech challengers that get acquired once their molecule shows promise. This is the core competitive rhythm of biotech: small companies take early scientific risk, and incumbents buy the winners. Roche's oncology franchise and Merck's Keytruda are examples of incumbent dominance built partly through internal R&D and partly through acquisition.

Who manufactures it

Complex biologics and cell therapies are frequently outsourced to CDMOs like Lonza or Samsung Biologics because building a sterile biologics plant costs hundreds of millions and years. The CDMO holds quiet power: capacity is scarce, so a manufacturing slot can gate a product launch. During the 2020 to 2022 period, CDMO capacity constraints were a real bottleneck across the industry.

Who distributes it

Oncology drugs are often infused, not swallowed. That changes the board entirely.

• Specialty distributors (McKesson's specialty arm, Cencora's) handle expensive, temperature-sensitive, complex-to-administer drugs.
• Many are administered in hospital outpatient centers or physician clinics, which buy through GPOs.
• Reimbursement runs through the medical benefit, not the pharmacy benefit, which means Medicare Part B (for administered drugs) and its "buy and bill" model matter, not the PBM formulary.

So the same company (say Cencora) shows up in both stories, but in the insulin case it is a bulk wholesaler and in the oncology case it is a specialty distributor with more clinical services and more margin.

Where Medtron fits: the pure device board

Now take a device with no molecule: an insulin pump or a cardiac pacemaker from Medtronic, Abbott, or Boston Scientific.

Here the balance of power shifts toward the hospital procurement side. A GPO like Vizient negotiates the price. But device firms hold two strong cards:

1. Physician preference. Surgeons and cardiologists often want a specific device they trained on. That loyalty weakens the GPO's ability to force commoditized pricing.

2. Razor and blade lock-in. A pump or a surgical robot creates recurring revenue in consumables, sensors, and service contracts. Medtronic's continuous glucose monitoring and pump ecosystem is a classic example: once a patient is on the platform, switching costs are high.

Reading the balance of power

Step back and the pattern is clear: the player who controls access to the patient or the payer captures disproportionate value.

• In US pharma, that is increasingly the PBM, not the manufacturer, because it controls formulary access. This is why manufacturers, insurers, and PBMs are now often owned by the same parent (CVS owns Caremark and Aetna; UnitedHealth owns Optum Rx). This vertical integration is the defining power shift of the last decade.
• In devices, power is more balanced between the manufacturer (via physician preference and lock-in) and the GPO (via aggregated buying).
• CDMOs and device-component suppliers hold situational power that spikes when capacity is scarce.
• Regulators (the FDA in the US, the EMA in Europe) are gatekeepers, not value-capturers, but they shape the board by deciding who gets to play and how fast biosimilars and generics can enter.

The competitive threat everyone watches: consolidation. When a PBM, an insurer, and a pharmacy sit under one roof, an independent manufacturer or specialty pharmacy has fewer places to turn.

Key Takeaways

• List price is not revenue. In US pharma, rebates to PBMs and wholesaler margins can cut a manufacturer's net take to a fraction of the list price. Always ask who captures the spread.
• The chain differs by product. Pills flow through PBMs and pharmacies; infused oncology drugs and devices flow through GPOs and specialty distributors under the medical benefit.
• The middleman with payer access holds the power. The big three PBMs, now vertically integrated with insurers and pharmacies, are the structural winners in US drug distribution.
• Devices resist commoditization through physician preference and consumable lock-in, giving manufacturers more pricing leverage than pharma has against PBMs.
• Europe removes a whole layer. National payers (NICE, G-BA) negotiate directly, so the rebate-spread economics that dominate the US largely do not exist there.