Prices, pipelines and patent cliffs: Inside pharma’s big reset

This earnings season, Europe’s greatest pharma corporations posted outcomes starting from 7% beats to three% misses — however nobody actually cared.

As an alternative, drugmakers seemed forward, with 2026 shaping as much as be a defining 12 months following a dramatic 2025, and one the place the affect from final 12 months’s developments is ready to crystallize.

“2025 was about understanding sort of the principles of the way forward for the sport… what’s nonetheless to be seen in [2026] is how these corporations really implement what they agreed to, significantly within the offers that you simply noticed with the Trump administration,” McKinsey Senior Companion Greg Graves informed CNBC.

Along with political dealings, corporations are going through a so-called “patent cliff” within the upcoming years, the place a number of the world’s best-selling medication lose exclusivity in key markets, exposing them to competitors from less expensive generics.

Whereas drugmakers are at all times to some extent touting their pipelines, they’re now placing them much more on show as they search to reassure buyers that their pipeline holds sufficient promise to offset upcoming patent expiries.

“With the dimensions of the patent losses which are developing over the following few years, you in all probability are listening to an even bigger give attention to the optimism for the longer term, versus near-term supply,” Graves stated. 

Novartis CEO Vas Narasimhan, for instance, informed CNBC’s “Squawk Field Europe” final week that his firm is about to lose $4 billion in gross sales and practically as a lot in earnings solely within the first half of this 12 months, marking “the most important set of lack of exclusivities in Novartis’ historical past.” 

In the identical breath, he highlighted that because of “nice progress drivers” and a “robust pipeline,” they’re nonetheless in a position to develop.

AstraZeneca seems to be equally assured in its pipeline, boasting doubtlessly 25 new blockbuster medicines by 2030, when it additionally hopes to succeed in $80 billion in income, up from the $59 billion seen in 2025.

Many corporations are additionally emphasizing the significance of their enterprise growth methods as they’re more and more trying to M&A to assist them discover the following blockbuster drug. 

The phrases “strategic match” and “bolt-on offers” have grow to be go-to strains for the CEOs. 

Whereas some corporations are focusing on smaller acquisitions and early-stage property, others are open to greater, late-stage offers to bridge the hole, Camilla Oxhamre, portfolio supervisor at Rhenman & Companions, informed CNBC.

Whereas corporations can fill that income hole by growing medication internally, occurring a procuring spree usually yields sooner outcomes. 

Sanofi’s CEO Paul Hudson realized that the onerous approach as his tenure as CEO got here to an abrupt finish on Thursday, closing out a six-year reign on the French firm, throughout which his emphasis on R&D had didn’t ship speedy outcomes. Sanofi has but to reply to CNBC’s request for touch upon Hudson’s departure.

Belén Garijo, at present CEO at Merck KGaA, will substitute Hudson with the mandate to “strengthen the productiveness, governance, and innovation capability of Analysis & Improvement,” Sanofi stated in an announcement.  

Sanofi has been clear-eyed about the necessity to offset the patent expiry of its blockbuster bronchial asthma drug Dupixent, which at present accounts for greater than a 3rd of gross sales and can lose key patents by early 2030s.

Ten years in the past, offers with Chinese language corporations had been extraordinarily uncommon, however in the present day, it occurs on a regular basis, famous Oxhamre.

“It has lots to do with the top market – the top market in the present day is primarily the U.S., and Europe is second,” she stated. “Many see that the top market 10 years from now will in all probability be the U.S. and China.”

Corporations are beginning to have a look at it as a strategy to doubtlessly de-risk property, utilizing China as “a platform to grasp how the drug works in a really speedy approach, understanding that they are doing their medical growth or their discovery growth life cycles a lot sooner than we’re in Europe or the U.S.,” he stated.

Whereas the speedy menace from President Donald Trump’s so-called Most Favored Nation drug pricing, or MFN, is not as sizzling because it was at one level final 12 months, it’s nonetheless a giant matter. 

Now the market desires to understand how corporations are literally going to play this. 

Will corporations delay launches in Europe to keep away from being tied down by European costs within the greater U.S. market? Or, will they undertake a single-price mannequin, even when meaning much less entry in some markets?

“These are the questions that we do not understand how they’ll get answered, however I feel I can inform you that each firm that I’ve labored with, there’s a number of thought being put into [those options],” stated Graves.

“The true key, going ahead, as we launch many of those new medicines, what’s the proper pricing technique, and we’ll have to consider that,” AstraZeneca’s CFO Aradhana Sarin informed CNBC final week. 

One other large unknown, particularly for weight problems gamers, is how price-sensitive prospects are in a direct-to-consumer market. 

No one fairly is aware of what occurs to volumes if a drug value is lower, Rothschild & Co Redburn analyst Simon Baker informed CNBC. “That by no means usually occurs in pharma, [if] you chop the value of a lung most cancers drug, you do not promote increased volumes of it, you simply lower the gross sales.”

Pricing for GLP-1 weight reduction medication continues to be a focus for buyers, nonetheless the weight problems house is exclusive and would not essentially work effectively as a sign for broader business tendencies.

It has grow to be extra of a client market than a medication market, Oxhamre stated, including that to this point, the direct-to-consumer publicity for different pharmaceutical corporations remains to be very restricted.

That may change as Novo Nordisk and Eli Lilly, the 2 dominating gamers, will doubtless face growing competitors as different corporations develop rival medication. 

AstraZeneca is transferring its GLP-1 capsule elecoglipron into late-stage trials, whereas Roche is aiming to grow to be a prime three weight problems participant, with a number of remedies beneath growth.

Within the U.S., Pfizer entered the race with the acquisition of Metsera final 12 months, and Amgen is growing a once-monthly injection MariTide, which it hopes may help it to faucet into the marketplace for weight upkeep. 

With the house changing into extra crowded, corporations try onerous to distinguish their medication. 

Weight upkeep is a giant theme, as research present most individuals stopping weight reduction medication finally regain the burden. 

Comfort is one other differentiating issue that’s driving the sector to focus on capsules similar to Novo’s newly launched Wegovy capsule, versus injections. An oral choice is claimed to be favored by customers and will additionally assist corporations with distribution, as they do not should be cold-stored. Extra long-acting molecules may additionally play a component.

GLP-1s usually include unwanted side effects, mostly gastrointestinal, an improved tolerability profile is one other key differentiator that corporations are taking a look at with amylin remedies that focus on one other intestine hormone, alongside treating associated circumstances.