As patents for blockbuster drugs (annual sales of $1 billion) expire and competition from biosimilars intensifies, growth at the global pharmaceutical companies that developed them has begun to slow.
Even as major corporations posted results that slightly beat market expectations, their stocks fell on concerns about growth, extending a trend of resetting expectations.
On top of that, uncertainty over U.S. drug pricing policy is adding pressure, and the push to secure future revenue sources through mergers and acquisitions (M&A) and technology transaction is expected to accelerate further this year.
According to the pharmaceutical industry on the 2nd, as first-quarter results from top global drugmakers are released one after another, market evaluations are weakening relative to performance.
While overall company revenue generally met forecasts, sales of key products plunged with the entry of biosimilars, heightening concerns about future growth.
◇ Sales up but stock prices down… "Questions over growth as reliance on off-patent drugs persists"
First, Johnson & Johnson (J&J) in the United States, which has held the No. 1 spot in global sales for 14 years, posted first-quarter revenue of $24.1 billion (35.86 trillion won) this year. That was up 10% from a year earlier, beating market expectations.
The market said, "Given that the stock has already risen about 15% this year on expectations for 2025 results and the follow-up pipeline, it is unclear whether this quarter's performance fully met expectations."
This reaction appears to reflect concerns over a revenue gap for core products. Stelara, a blockbuster for autoimmune diseases developed by subsidiary Janssen, generated about 15 trillion won in annual global sales but, after its U.S. patent expired last year, revenue plunged about 60% to $656 million (about 976 billion won) as drugmakers worldwide, including Korea's Celltrion and Samsung Bioepis, rushed out biosimilars.
A similar pattern emerged at AbbVie in the United States. On the 29th (local time), AbbVie reported revenue of $15 billion (about 22.32 trillion won), up 12.4% from a year earlier and above expectations, but the market reaction was cool. As sales of the autoimmune therapy Humira fell 40.3% year over year to $688 million (about 1 trillion won), the stock dropped 4.25%.
Humira is regarded as the first drug in the global pharmaceutical market to surpass $20 billion (about 28.7 trillion won) in annual sales, but after its U.S. patent expired in 2023, a wave of biosimilars made a decline in results unavoidable.
European drugmakers also showed a disconnect between results and share prices. The United Kingdom's AstraZeneca (AZ) saw revenue rise 8% from a year earlier on growth in cancer drugs such as Enhertu and Imfinzi, and GSK plc also posted a 5% increase in revenue. However, on the London market, AstraZeneca's shares fell 1.4%, and GSK dropped as much as 8%.
By contrast, some won positive market reviews with strategies to extend exclusivity for blockbusters. France's Sanofi said it would extend patent protection for Dupixent, an atopic dermatitis treatment that accounts for about 40% of total revenue, to 2045 by developing a new formulation that lengthens the dosing interval from two weeks to four.
Despite ongoing clinical risks last year, including a phase 2 failure in asthma and a phase 3 failure in chronic obstructive pulmonary disease (COPD), the stock rose 3.39% after the earnings release.
◇ Big Pharma turns to M&A for future growth amid patent expirations and drug pricing pressure
As biosimilars flood the market with patent expirations, the global pharmaceutical industry is seeing a full-fledged slowdown in growth along with revenue gaps for original drugs. For now, even if results meet expectations, the lack of clear future revenue sources is driving share declines, continuing a "decoupling" trend.
U.S. drug pricing policy is adding further strain. The "most-favored-nation (MFN)" pricing policy being pursued by the Trump administration would align U.S. drug prices with the lowest levels among other advanced countries. For drugmakers that have earned revenue by charging higher prices in the U.S. market, their key revenue source could be shaken. That has raised concerns the policy could affect the global drug pricing structure overall.
Pascal Soriot, AZ chief executive officer (CEO), said, "If the price gap between the United States and reference countries becomes excessively large, it may be difficult to launch new drugs in those countries."
Vas Narasimhan, Novartis CEO, also noted, "The impact of the MFN policy has not yet materialized, but it will become visible within the next 18 months," adding, "Discussions with European governments are not sufficient."
Thomas Schinecker, CEO of C. H. Boehringer Sohn AG & Co. KG in Germany, likewise warned, "If U.S. drug prices are linked to those of other countries, Europe could be left behind in access to innovative new drugs."
With revenue gaps from patent expirations overlapping with drug pricing policy risks, the global pharmaceutical industry is expected to become more active this year in rapidly securing new-drug pipelines through mergers and acquisitions (M&A) and technology transaction.
In fact, according to Reuters on the 1st (local time), the biotech M&A market in 2026 is projected to enter a boom phase marked by so-called big deals. The analysis is that large drugmakers are pursuing aggressive acquisitions to prepare for the patent cliff.
Industry watchers say that beyond merely responding to patent expirations, a combination of ample cash holdings, relatively depressed valuations for biotech corporations, an increase in new-drug approvals, and accumulated experience dealing with regulatory risks is driving an expansion in transaction.
Patrice Mesnier, cofounder of U.S. investment firm Oldenbourg Capital Partners, said, "Strategic urgency, retrenched private investment, and an uncertain IPO (initial public offering) market have combined to create ideal conditions for accelerating M&A."
Bill Holodnak, head of the U.S. consulting firm Occam Global, also said, "Pharmaceutical companies are moving amid anxiety over shrinking portfolios," adding, "If they cannot develop new drugs in-house, they have no choice but to secure candidates externally."