I think the downside of no PhD is that you're much more likely to hit a glass ceiling. There are obviously exceptions but you're more likely to be put in charge of a research project in industry if you have a PhD than not.

Clearly an MS or BS level science student can absolutely eventually do the same things as a PhD or postdoc. The latter just have scientific approaches that have usually been subject to repeated and rigorous challenge by their peers, which means they are typically (though by no means always) more rigorous out of the box. In my time in industry I've found that in many cases that kind of critical challenge doesn't happen as much as in academia.

In the end I think people in hiring positions use the PhD letters as a screening tool for how strong a scientist the person is, without necessarily really evaluating the individual.