If pharmaceutical drug patents are an hourglass turned over on the day of approval – with the approaching lack of exclusivity identified within the business because the “patent cliff” – then Massive Pharma is at present watching the ultimate grains of sand slipping by way of the neck of the glass.
On the backside of the hourglass awaits an unforgiving world of generic and biosimilar competitors. Between 2025 and 2030, the patent cliff is about to be one of many greatest since 2010 by income in danger, based on analysts.
Gone would be the exclusivity that underpinned years of analysis budgets, dividends and acquisitions, changed by a market by which hungry rivals arrive at a reduction and pricing energy drains quick.
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And the patent cliff is just not the one headwind. US drug makers are additionally working in a more durable political setting as Washington takes a tougher line on Chinese language life sciences and provide chains.
The Biosecure Act, awaiting ultimate passage within the US Senate and US President Donald Trump’s signature to turn out to be regulation, has added uncertainty to an business that’s concurrently attempting to refill pipelines at pace.
For US drug makers, all of those shifts are approaching like icebergs shearing off a glacier: slowly at first, then abruptly.
Morgan Stanley estimates US$171 billion of 2025 income at large-cap biopharma firms will go off-patent by the top of 2030, forcing the business right into a race to exchange ageing blockbusters.
Countdown nervousness was on show in San Francisco earlier this yr on the JPMorgan Healthcare Convention, the place pharmaceutical large Pfizer chief government Albert Bourla warned traders and analysts of an approaching “lack of exclusivity” wave.
“There’s clearly a lack of exclusivity wave coming,” Bourla stated. “It will value us between US$17 billion and US$18 billion and it is coming in progressively in 2026, 2027 and 2028.”
Pfizer is just not alone. Biopharma multinational Bristol Myers Squibb (BMS) chief government Chris Boerner additionally warned of a “stacking impact” as a number of medication lose safety in fast succession.
The dynamics are nicely understood in an business the place a handful of blockbusters can underwrite years of pricey analysis and the place patents could run 20 years on paper, however far much less in observe as soon as years of growth are taken into consideration.
“Upon patent expiration, generics or biosimilars enter the market at a major low cost to seize share,” stated Bruce Liu, a senior companion at consulting agency Simon-Kucher.
For Chinese language biotechs, nonetheless, the identical deadlines are trying much less like a cliff and extra like a chance, because the looming disaster pushes massive drug makers to hunt for Chinese language biotech belongings to refill their pipeline.
The chance has not been misplaced on Beijing both.
Whilst Washington tightens its stance, Chinese language policymakers have signalled that biotech and biomanufacturing must be pillars of the following progress cycle, figuring out biomanufacturing as a brand new financial progress engine in its push for tech self-reliance.
Chinese language biotech corporations – lots of them working with decrease prices and quicker medical execution – are more and more nicely positioned to produce the “new molecules” world firms want by way of licensing offers that may be cheaper and faster than constructing replacements in-house.
In line with Cui Cui, head of healthcare analysis for Asia at US funding financial institution Jefferies, Chinese language biotech firms “are reshaping the US biopharma sector”.
“In-licensing belongings from China might provide world pharmaceutical firms a treatment to alleviate stress affordably and inside a manageable timeframe,” she stated.
That shift can also be altering what world drug makers are keen to purchase.
Prior to now, many most well-liked late-stage belongings – medicines already in Section III trials or nearing regulatory submission – as a result of there’s extra human knowledge, much less scientific danger and a clearer path to commercialisation.
However as timelines tighten, drug makers are more and more keen to license earlier-stage candidates and use their capital and growth infrastructure to push them by way of the pipeline.
In the end, the controversy comes again to the identical worry: what occurs the second exclusivity ends. As soon as generics or biosimilars arrive, worth erosion will be swift and brutal, leaving even probably the most dominant franchise uncovered.
For business gamers, the worry is as actual because the stakes are excessive.
Drug costs decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets, with the US experiencing the steepest decline, based on figures from the JAMA Well being Discussion board.
US blockbuster medication from Merck & Co, Regeneron, BMS and Pfizer have been among the many most uncovered to this pricing squeeze over the following six years, based on a report from Jefferies.
Keytruda, Merck’s flagship lung most cancers drug that generated US$29.48 billion final yr – 46 per cent of the corporate’s complete gross sales – faces expiration in 2028 in each US and Chinese language markets.
BMS, in the meantime, depends on blood thinner Eliquis for US$13.33 billion of gross sales, with patent expirations approaching in Japan in 2026 and the US in 2028.
Different franchises face comparable cliffs within the years forward, including to the business’s urgency to rebuild pipelines earlier than pricing energy drains away.
In anticipation of post-patent worth falls, Merck has over the previous 5 years channelled US$40 billion into acquisitions, collaborations and licensing agreements together with a number of offers with Chinese language biotech corporations comparable to LaNova Medicines, Hansoh Pharma and Kelun Biotech, all of which specialize in most cancers therapies.
The shift is seen throughout the market.
Chinese language firms accounted for 32 per cent of out-licensing offers to multinational companies by worth within the first half of 2025, up from 21 per cent in 2024 and 2023, and from single digits within the years following 2011.
Cui additionally pointed to a structural benefit. “Value benefits prolong to labour, the provision chain, and medical trials – China biotech belongings additionally commerce at a notable low cost to their world friends,” she stated.
Jefferies estimated that upfront funds to Chinese language firms have been 60 to 70 per cent decrease, whereas Chinese language biotech might ship a 30 to 50 per cent acceleration in timelines from molecule validation to proof of medical idea, aided by quicker affected person enrolment and price effectivity.
Drug costs decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets. Picture: Shutterstock alt=Drug costs decreased by 30 to 82 per cent over eight years after patent expiration in eight developed markets. Picture: Shutterstock>
These benefits could be compelling even in calm political waters – however they’re arriving amid heightened US-China tensions and rising scrutiny in Washington of Chinese language life sciences.
Cui, nonetheless, argued the industrial logic was proving laborious to withstand. “Geopolitics shouldn’t be a priority,” she famous.
Within the newest signal of this development, Changchun Excessive-Tech’s unit Shanghai Scizeng Medical licensed out its clinical-stage thyroid drug GenSci098 to Yarrow Bioscience in a deal value as much as about US$1.5 billion, granting the US biotech unique rights to develop and commercialise the injectable antibody exterior mainland China, Hong Kong, Macau and Taiwan, based on its alternate submitting on December 16.
Pfizer has additionally agreed to pay as much as US$2.1 billion to Fosun Pharma’s subsidiary Yao Pharma for an experimental oral weight problems drug, underneath a deal that grants Pfizer unique worldwide rights to develop, manufacture and commercialise the GLP-1 receptor agonist.
That momentum has continued regardless of rising political tensions. US Congress has focused Chinese language biotech corporations it considers nationwide safety dangers by way of the Biosecure Act, a part of the Nationwide Protection Authorisation Act (NDAA) launched earlier this month.
Workers pack medicines at a pharmaceutical firm in northwest China’s Shaanxi Province. Picture: Xinhua alt=Workers pack medicines at a pharmaceutical firm in northwest China’s Shaanxi Province. Picture: Xinhua>
Earlier variations that explicitly named WuXi AppTec and WuXi Biologics did not make it into the 2025 NDAA after opposition from senior lawmakers and the biopharma business, based on a Macquarie Capital report.
“Uncertainty stays, however we consider the NDAA and Biosecure influence [on Chinese drug developers and manufacturers] can be restricted,” stated Tony Ren, head of Asia healthcare analysis at Macquarie Capital.
The watered-down end result “demonstrated that the underlying present is that world innovation and collaboration in healthcare will drive higher affected person care and in addition decrease prices,” stated George Lin, government vice-president of Shanghai-headquartered Hua Medication.
“If American pharmaceutical will not be allowed to in-license these sorts of [Chinese] medication, will that actually assist innovation in San Francisco and Boston?” Lin stated. “American pharmaceutical cannot simply out of the blue develop these [drug] compounds themselves. It will simply take so lengthy to try this.”
Even the place Washington has pushed to reconfigure provide chains again to the US by way of tariffs and different insurance policies, the pharmaceutical business stays conservative.
Purchasers sometimes place industrial manufacturing orders solely after manufacturing capability had secured regulatory approval, Ren stated, a course of that might take 18 months to virtually three years. Abrupt decoupling, he added, might increase prices and prolong approval timelines.
“The US biopharma business has been unwilling to decouple from CDMOs (contract growth and manufacturing organisations) regardless of the urging of China hawks,” Ren stated.
Chinese language biotech corporations – lots of them working with decrease prices and quicker medical execution – are more and more nicely positioned to produce the ‘new molecules’. Picture: Xinhua alt=Chinese language biotech corporations – lots of them working with decrease prices and quicker medical execution – are more and more nicely positioned to produce the ‘new molecules’. Picture: Xinhua>
WuXi AppTec and WuXi Biologics additionally keep a major footprint within the US, together with laboratories and manufacturing websites totalling practically 344,000 sq ft throughout Massachusetts and New Jersey, based on the corporate.
For Cui, the route of journey is evident.
“Demand from multinational companies in China will proceed,” she stated, including that potential bestsellers have been more likely to emerge in oncology, autoimmune ailments and cardiovascular drugs.
Jefferies pointed to candidates together with PD-1/VEGF bispecific antibodies and antibody-drug conjugates in oncology, in addition to oral GLP-1 medication and orexin-based therapies in different illness areas.
For Massive Pharma, the logic is more and more laborious to flee. Patents don’t negotiate; they expire on schedule, and as soon as they do, pricing energy not often returns.
Within the scramble to exchange ageing blockbusters, Chinese language biotech has turn out to be an ever extra sensible supply of recent molecules – cheaper, quicker and, in some circumstances, genuinely aggressive.
Washington could attempt to redraw the boundaries of cooperation, however the hourglass remains to be operating.
