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It is a tale as old as time. Pharmaceutical companies must replenish their drugs pipeline before exclusivity rights on top-selling products expire. But even though Big Pharma knows what the ending should be, the companies don’t always get the plot right.
Risks from patent expiries have been relatively low since 2020. But the percentage of prescription drug sales at patent risk industry-wide in 2027-2028 will reach the highest level since 2015, reckons Evaluate.
In theory, it should be slightly different this time — compared with the patent panics of the past. The move towards harder-to-copy biologic drugs means drugmakers do not face such a steep drop-off in sales after exclusivity expires. Companies have become more adept at protecting key drugs, both through litigation and by seeking approvals in new diseases.
Still, that has not stopped investors from fretting about pipeline replacement at companies such as Bristol Myers Squibb (BMS), Sanofi and Roche.
Among the notable patent expiries this decade is BMS and Pfizer’s Eliquis blood clot treatment from 2026. BMS will also lose US exclusivity on its lung cancer treatment Opdivo in 2028. MSD, known as Merck in the US, expects competition for its Keytruda cancer treatment from late 2028.
Sales of Eliquis, a small molecule pill, are expected to top $13bn in 2025. By 2030 analysts are forecasting less than $1.8bn, according to Visible Alpha. Revenues are also expected to be hit by US pricing reforms.
New treatments take time to come through. BMS, which last week posted better than expected earnings from treatments such as anaemia drug Reblozyl and heart medicine Camzyos, has previously delayed by a year, to 2026, when it expects the new product portfolio to generate more than $10bn in sales.
If harder-to-copy drugs have smoothed the sector’s patent cliffs it isn’t obvious in European valuations. Sanofi trades on a forward price/earnings ratio of 11 times, Roche on 12.4 times and Novartis on 14.5 times. By comparison, obesity drugs developer Novo Nordisk trades on 33.6 times.
Roche is struggling to convince investors that it can boost its research productivity after high profile setbacks in 2022. French rival Sanofi is fighting a similar battle despite upping R&D spend by around €700mn this year as it works to reduce its reliance on its asthma and eczema treatment Dupixient. Dupixient loses exclusivity rights in the early 2030s.
The winners will, again, be M&A bankers. Pharma companies, while talking up pipelines, are turning to deals to boost their growth outlook. In December, BMS announced a $14bn deal for Karuna Therapeutics which owns the schizophrenia drug KarXT. Evaluate expects KarXT to be the biggest drug launch of 2024 if it secures US regulatory approval, with estimated 2028 sales of $2.8bn.
This time, as in the past, only innovation and trial success will really lead to greater conviction that this classic story has a happy ending.
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