The biopharma sector enters 2026 with real momentum and a renewed sense of urgency. Innovation is scaling again. A significant patent cliff is approaching. And the macro environment, for the first time in several years, is more supportive than restrictive.
For leaders and investors across pharma, a small number of trends will meaningfully shape decisions on pipeline strategy, capital allocation, and partnerships over the next 12–24 months.
Below are 10 core issues that stand out.
1. Innovation Productivity Is Rising
Biopharma continues to produce therapies that materially change standards of care across oncology, rare disease, cardiometabolic disease, and neurology.
The growing cluster of high-impact launches tells a clear story: GLP-1s in obesity, gene therapies such as Zolgensma, next-generation ADCs like Enhertu, and CRISPR-based products such as Casgevy demonstrate that the industry can repeatedly deliver breakthrough innovation, not just incremental gains.
That consistency matters.
2. “Big Drugs for Big Markets” Has Just Started
The obesity market has shown that premium or near-premium pricing can be sustained in very large patient populations when clinical benefit is transformative.
This has implications for other high-prevalence conditions, including COPD, depression, heart failure, and major autoimmune diseases. Where differentiation is clear and outcomes are meaningful, multibillion-dollar franchises are achievable.
3. The Macro Environment Is Finally Supportive
Core U.S. inflation has moderated and remained stable. Short-term interest rates are trending downward.
These conditions create a more constructive backdrop for equity issuance, M&A, and long-duration assets such as biotech. After several years of capital discipline driven by macro pressure, the financing environment is beginning to work with the sector rather than against it.
4. Valuations Are Up, but Deals Still Work
Average forward revenue multiples for U.S. biotechs have recovered to about 3.6x five‑year‑forward sales, well above the 2023–2024 trough, but still materially below the roughly 6.8x multiples big pharma actually paid in 2025 acquisitions. That spread means many M&A transactions can still be accretive, especially in Phase 1/2 assets and earlier where valuation expectations remain more modest.
5. Patent Cliff and Firepower Make More M&A Likely
More than 40 of large‑cap pharma revenue is at risk from patent expirations over the next five years, with 200–300 billion in annual sales potentially exposed to generics and biosimilars. Top pharma companies collectively have about 500 billion of “comfortable” M&A capacity and up to 1.2 trillion of stretch firepower, yet 2025 dealmaking only backfilled a small fraction of the looming revenue gap, implying continued or increased M&A intensity in 2026–2027.
6. The Quality Bar for Public Biotech Has Risen
After a severe shake‑out from 2022 to 2025, the number of U.S.‑listed biotechs has shrunk, but the share with “very good” datasets has climbed sharply, and those companies now concentrate over 90 of sector enterprise value. At the same time, history from the last 40 months shows that “medium data” names often generated outstanding returns once their programs matured, suggesting room for stock‑picking beyond the obvious winners.
7. Capital Markets Are Selectively Open
Global biopharma financings in 2025 were robust – around 133 billion – with especially strong activity in U.S. follow‑ons and private debt, even as IPO volume stayed low. Importantly, investors made money on 2025 IPOs, follow‑ons, and PIPEs on average, which historically is a prerequisite for a healthier new‑issue calendar and more receptive follow‑on market in the following year.
8. Policy Risk Is Easing from Acute to Chronic
Despite volatile rhetoric on drug pricing, MFN concepts, and tariffs, the practical outcome of recent U.S. policy has been narrower and less punitive than feared, with relatively light enforcement of IRA pricing and an accommodative stance toward most pharma–biotech M&A. New tools like the Commissioner’s National Priority Review Voucher program, which offers ultra‑accelerated review for selected high‑priority products, are incrementally positive for time‑to‑market and competitiveness.
9. China Is a Strategic Factor, Not Yet an M&A Threat
China is rapidly scaling scientific talent, clinical execution speed, and CDMO/CRO capacity, and is now deeply integrated into the global biopharma supply chain. However, geopolitical and regulatory constraints mean that while licensing and outsourcing with Chinese firms are booming, major Western pharma has not yet executed meaningful acquisitions of Chinese public biotechs—limiting direct M&A competition for Western assets in the near term.
10. Four Fields to Watch for 2026 “Fireworks”
Several therapeutic and platform areas are positioned for outsized attention in 2026:
- Cell therapies in Parkinson’s disease
- T-cell engagers in B-cell diseases and autoimmunity
- The next competitive wave in obesity
- Next-generation RNA platforms
Business development activity in these spaces is already active. Strategic positioning is underway. It would not be surprising to see them anchor the next cycle of high-value deals and financings.
