Prices, pipelines and patent cliffs: Inside pharma’s big reset
This earnings season, Europe’s largest pharmaceutical companies posted results ranging from losses of 7% to losses of 3%, but no one really cared.
Instead, drugmakers looked ahead; 2026 will be a decisive year, following a dramatic 2025, and one in which the impact of last year’s developments will become evident.
“2025 has been about understanding the rules for the future of the game…still remains to be seen [2026] “It’s how these companies actually implement what they agreed to, especially in your deals with the Trump administration,” McKinsey Senior Partner Greg Graves told CNBC.
In addition to political agreements, companies will face a so-called “patent cliff” in the coming years; Here some of the world’s best-selling medicines will lose exclusivity in key markets, exposing them to competition from much cheaper generics.
Pipelines are key and companies know it
Pharmaceutical manufacturers always to some extent Touting pipelines, they’re now flaunting them even more as they try to reassure investors that pipelines hold enough promise to offset looming patent expirations.
“Given the magnitude of patent losses that will occur over the next few years, you’re probably hearing more focus on optimism for the future rather than short-term delivery,” Graves said.
Novartis For example, CEO Vas Narasimhan told CNBC’s “Squawk Box Europe” last week that his company was about to lose $4 billion in sales and nearly the same amount in profits in the first half of this year, making it “the largest loss of exclusivity in Novartis history.”
At the same time, he emphasized that they were still able to grow due to “big growth drivers” and a “strong pipeline.”
AstraZeneca Boasting 25 potentially blockbuster new drugs by 2030 and hoping to reach $80 billion in revenue, up from the $59 billion seen in 2025, the company appears equally confident in its pipeline.
While many companies are increasingly turning to mergers and acquisitions to help them find the next blockbuster drug, it also highlights the importance of business development strategies.
The phrases “strategic fit” and “bolt-on deals” have become CEO buzzwords.
While some companies target smaller acquisitions and early-stage assets, others are open to larger, late-stage deals to bridge the gap. Camilla Oxhamre, portfolio manager at Rhenman & Partners, told CNBC:
While companies can fill this revenue gap by developing drugs in-house, going on a shopping spree often yields faster results.
Sanofi’s CEO Paul Hudson learned his tenure as CEO came to an abrupt end on Thursday, ending his six-year reign at the French company during which its emphasis on R&D failed to deliver rapid results. Sanofi has not yet responded to CNBC’s request for comment on Hudson’s departure.
Belén Garijo is currently CEO Merck KGaAHe will replace Hudson with the mandate to “strengthen the productivity, governance and innovation capacity of Research and Development”. Sanofi said in a statement:
Sanofi has been clear-eyed about the need to offset the patent expiration of its blockbuster asthma drug Dupixent, which currently accounts for more than a third of sales and will lose key patents in the early 2030s.
China is hotter than hot
China has emerged as arguably the most interesting destination at the moment, with mergers and acquisitions becoming the focus of companies looking to revamp their pipelines. It has recently become an important source of innovation as many companies have announced it. It is striking deals with Chinese firms to secure access to assets developed in the world’s second-largest economy.
Oxhamre noted that a decade ago, deals with Chinese companies were extremely rare, but today they happen all the time.
“This has a lot to do with the end market; today the end market is primarily the US and Europe is second,” he said. “Many people think that the end market 10 years from now will probably be the US and China.”
The share performance of Europe’s largest pharmaceutical companies has varied widely over the last 12 months.
Over the past year, the debate has moved from talking about China as a market to a source of innovation, Graves said.
“Especially what you’ve heard since the beginning of this year [and] “At the end of last year, there’s been a really concentrated effort to drive innovation from China and get the right presence in the market.”
Companies are starting to look at this as a way to potentially de-risk assets, using China as “a platform to understand how the drug works very quickly, knowing that they’re doing their clinical development or discovery development life cycle much faster than they do in Europe or the U.S.,” he said.
Price debate grows
President Donald Trump’s so-called direct threat Most Favored Nation drug pricing, or MFN, is still a big topic, just not as hot as it was last year.
Now the market wants to know how companies will actually play this.
Will companies delay European launches to avoid being tied to European prices in the larger US market? Or will they adopt a single price model, even if it means less access in some markets?
“These are questions we don’t know how to answer, but I think I can tell you that they are highly considered at every company I’ve worked for. [those options]” said Graves.
“The real key, going forward, is what the right pricing strategy is as we bring many of these new drugs to market, we’re going to have to think about that,” Aradhana Sarin, AstraZeneca’s CFO, told CNBC last week. he said.
Another big unknown, especially for obesity players, is how price sensitive customers are in a direct-to-consumer market.
No one knows exactly what will happen to volumes if the drug price is reduced, Rothschild & Co Redburn analyst Simon Baker told CNBC. “This normally never happens in pharmacy, [if] “You lower the price of a lung cancer drug, you don’t sell it in higher quantities, you just reduce sales.”
The obesity trade isn’t going anywhere
Pricing of GLP-1 weight loss drugs remains a focus for investors, but the obesity space is unique and may not serve well as a signal for broader industry trends.
It has become more one There is more of a consumer market than a pharmaceutical market, Oxhamre said, adding that so far other pharmaceutical companies’ direct-to-consumer exposure is still very limited.
This may change as follows: Novo Nordisk And Eli LillyThe two dominant players will likely face increased competition as other companies develop rival drugs.
AstraZeneca is moving its GLP-1 pill elecogliprone into late-stage trials. Roche It aims to be among the top three in obesity with various treatments being developed.
in the USA, Pfizer It joined the race last year with the purchase of Metsera and amgen It is developing a once-monthly MariTide injection that it hopes could help it enter the market for weight management.
As the field becomes more crowded, companies are trying to differentiate their medicines.
Maintaining weight is a big issue, as research shows that most people eventually come off weight loss medications. gain the weight back.
Convenience is another differentiating factor that is driving the industry to target pills, such as Novo’s newly launched Wegovy pill, over injections. It is said that the oral option is preferred by consumers and can also help companies with distribution as they do not need to be stored in the cold. Longer-acting molecules may also play a role.
While GLP-1s often come with side effects, mostly gastrointestinal, the improved tolerability profile is another key differentiator companies are looking at in amylin therapies, which target another gut hormone, as well as treating related conditions.
