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Healthcare executives gather for their big annual conference in San Francisco on Monday as the sector is flush with cash and set for a deals spree as patents on drugs worth almost 12 per cent of the industry\u2019s revenues expire in the years ahead.<\/p>\n
The JPMorgan healthcare conference takes place as uncertainty recedes over President Donald Trump\u2019s trade wars, drug pricing policy and the leadership of key regulators such as the US Food and Drug Administration. In response, the S&P biotech index, known as the XBI, has surged to a four-year high, outperforming the wider index. <\/p>\n
In addition, drugs that contribute about $180bn of revenue a year are set to go off patent in 2027 and 2028, representing almost 12 per cent of the global market, according to research firm Evaluate Pharma. More than $40bn of sales are expected to lose patent protection this year, Evaluate has estimated.<\/p>\n
\u201cThe need to take big swings becomes more pressing,\u201d said Jeremy Meilman, head of healthcare investment banking at JPMorgan. \u201cSeveral of the large-cap pharmaceutical companies are shopping around for strong assets and a number have taken action but still have more firepower. This contributes to our optimism for 2026.\u201d<\/p>\n
Several large drugmakers have performed well, and weight-loss drug giant Eli Lilly in recent months became the first pharmaceutical group to pass a $1tn market capitalisation, joining a gilded rank historically reserved only for Big Tech. <\/p>\n
Merck, which is facing loss of patent exclusivity on its $30bn-a-year mega-blockbuster Keytruda, is in talks to buy early-stage cancer drugmaker Revolution Medicines, the FT revealed this week<\/a>. If a deal materialises, Revolution Medicines could come with a price tag of at least $28bn, making it the biggest pre-commercial biotech deal ever and largest healthcare deal in at least two years. <\/p>\n Earlier this week, Eli Lilly struck a $1.2bn deal to buy autoimmune disease-focused biotech Ventyx Biosciences. <\/p>\n Patent expirations are catching up with pharma groups across the board. A popular blood-thinner made by Pfizer and Bristol Myers Squibb is losing patent coverage in major European markets in the second half of this year and in the US in 2028. BMS could lose up to 11.5 per cent of its revenue from 2026 to 2030 due to patent expirations, JPMorgan has estimated.<\/p>\n \u201cWe are moving closer to the cliffs for the guys with the highest need,\u201d said Rod Wong, chief investment officer at RTW Investments. For M&A in 2026, \u201cI would expect it to be more competitive,\u201d he added. <\/p>\n The tail-end of last year brought several intense battles between pharma groups over coveted biotech assets. Pfizer and Novo Nordisk squared off in a public bidding war for weight loss biotech Metsera, with Pfizer prevailing by agreeing to pay more than $10bn<\/a>. <\/p>\n Before selling to Merck in November for $9.2bn, flu-prevention biotech Cidara Therapeutics received bids from three other companies, according to regulatory filings. <\/p>\n \u201cEverybody needs to transact in a meaningful way,\u201d said Siddhart Nahata, global head of healthcare investment banking at Morgan Stanley. \u201cThere\u2019s enough interesting biotechs out there that we could get past the M&A volumes of last year.\u201d<\/p>\n Spying an opportunity, investment banks are redoubling their efforts to fight for advisory roles in healthcare M&A. Goldman Sachs this year vaulted to the top of the ranking for the total dollar value of healthcare deals. Goldman has started to chip away at boutique bank Centerview Partners\u2019 dominance in winning lucrative roles selling biotechs. But Centerview retained its crown as the bank with the highest fees generated from the healthcare sector, according to LSEG data. <\/p>\n