Q3 Health Care Earnings: Pharma Patent Cliffs

The pharmaceutical sector faces a major patent cliff, while GLP-1 drugs offer substantial but increasingly competitive growth.

• Drugs generating more than $400 billion in annual sales are expected to lose patent protection by 2031, including Merck’s Keytruda in 2028 and Bristol-Myers Squibb’s Opdivo and Eliquis; Keytruda generated almost $32 billion last year, while Eliquis generated more than $14 billion.
• Pharma companies spent $114 billion on acquisitions in Q2 2026, the highest quarterly total since 2019, as Merck, AbbVie, and GSK pursued deals worth at least $5 billion to replenish their pipelines.
• The U.S. GLP-1 user base has reached about 16 million people, triple its 2022 level but below the 30–35 million users Boston Consulting Group projects for 2030; Eli Lilly and Novo Nordisk dominate the market.
• Novo captured more than 80% of GLP-1 pill sales through Q2 after launching its Wegovy pill in January, while Lilly’s Foundayo, launched in April, underperformed expectations and is under review in more than 40 markets.
• Medicare began covering weight-loss GLP-1s in July at a temporary $50 copay, while Bank of America spends about $250 million annually on employee access; however, discounts, payer changes, generic competition, and expiring patents could pressure net prices.

Takeaway: Investors should focus on how each drugmaker replaces expiring revenues, funds acquisitions and research, manages pricing pressure, and delivers clinical and regulatory milestones rather than relying only on quarterly earnings.