As blockbuster drugs (annual sales of $1 billion) lose patent protection and biosimilar competition intensifies, growth at the global drugmakers that developed them has started to slow.
Even as major corporations posted results that slightly beat market expectations, their share prices fell on concerns about growth, signaling a continued reset in expectations.
On top of this, uncertainty over U.S. drug pricing policy is adding to the pressure, and the push to secure future growth engines through mergers and acquisitions (M&A) and technology transaction is expected to accelerate this year.
According to the pharmaceutical industry on the 2nd, as first-quarter results for the year from top global drugmakers are announced one after another, market assessments are turning more cautious relative to the numbers.
While overall company revenue generally met forecasts, sales of key products plunged with the entry of biosimilars, heightening concerns about future growth.
◇ Sales rose but shares tumbled… "Questions over growth amid reliance on drugs facing patent expiry"
First, Johnson & Johnson (J&J) of the United States, which has held the No. 1 spot in global sales for 14 years, reported 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 noted, "Given that the stock has already risen about 15% this year on optimism for 2025 results and the follow-on pipeline, it is questionable whether this quarter's results fully met expectations."
The reaction appears to reflect concerns over a sales gap in key products. Stelara, a blockbuster developed by subsidiary Janssen for autoimmune diseases with about 15 trillion won in annual global sales, saw revenue plunge about 60% to $656 million (about 976 billion won) after its U.S. patent expired last year, as drugmakers worldwide, including Celltrion and Samsung Bioepis in Korea, rushed out biosimilars.
A similar trend emerged at U.S. company AbbVie. On the 29th (local time), AbbVie reported revenue of $15.0 billion (about 22.32 trillion won), up 12.4% from a year earlier and above expectations, but the market response was cool. As sales of the autoimmune therapy Humira fell 40.3% year over year to $688 million (about 1 trillion won), the share price fell 4.25%.
Humira is cited 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 flood of biosimilars has made a decline in results unavoidable.
European drugmakers also showed a disconnect between results and share prices. The United Kingdom's AstraZeneca (AZ) posted an 8% year-over-year increase in revenue on the back of oncology growth from Enhertu and Imfinzi, and GSK plc also saw revenue rise 5%. However, on the London market, AstraZeneca shares fell 1.4%, and GSK shares dropped as much as 8%.
By contrast, some earned favorable market reviews by extending exclusivity for blockbusters. France's Sanofi said it developed a new formulation of its atopic dermatitis treatment Dupixent that extends the dosing interval from two weeks to four, with a strategy to extend patent protection through 2045.
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 hunts for future growth through M&A amid pressure from patent expirations and pricing policy
As biosimilars flood the market following patent expirations, the global pharmaceutical industry is seeing a full-fledged slowdown in growth alongside revenue gaps for original drugs. Even when results meet expectations for now, share prices are falling as future growth drivers remain unclear, continuing a "decoupling" trend.
U.S. drug pricing policy is adding further pressure. The "most favored nation (MFN)" pricing policy being pursued by the Trump administration would align U.S. drug prices to the lowest level among other advanced countries. For drugmakers that have earned revenue by charging higher prices in the U.S. market, a core profit source could be shaken. This has raised concerns that the move could affect the global drug pricing system as a whole.
Pascal Soriot, CEO of AZ, 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, CEO of Novartis, also said, "The impact of the MFN policy has not yet fully 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 sidelined in access to innovative medicines."
With revenue gaps from patent expirations overlapping with risks from pricing policy, the global pharmaceutical industry is expected to step up efforts this year to quickly secure new-drug pipelines through mergers and acquisitions (M&A) and technology transaction.