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• Analyzing the impacts of FDA Breakthrough Therapy Designation. • This study unveils intriguing economic and developmental outcomes for biotechnology and small pharmaceutical companies. • There is the potential for significant short-term share price jumps and improved approval rates. • Cautionary insights into long-term market performance are discussed. Biotechnology and small pharma companies must recognize the opportunity presented by FDA Breakthrough Therapy Designation (BTD) to expedite drug development for serious conditions. This paper evaluates BTD economic and developmental impacts on such companies. Analysis of 29 BTD events from 2017 to 2022 revealed immediate share price boosts and improved drug approval rates, alongside faster development times. Yet, long-term share prices underperformed relative to the broader market, underscoring the persistent risks in pharma investments. Although offering new insights, the limited sample size calls for further investigation. [ABSTRACT FROM AUTHOR]