The Worldlines of Pharma Stories Are Converging Toward the Same Destination.

The worldlines of pharma stories are converging toward the same destination in a way that different paths lead to the same end.

In September, Merck had to contend with yet another competitive alliance — Qilu Pharmaceutical and Cipla reached an agreement, settling the U.S. commercialization rights for a Keytruda biosimilar. Novo Nordisk admitted to investors that the expiration of semaglutide's market exclusivity is "the elephant in the room." And Eli Lilly, to secure early-stage R&D, placed a $3.35 billion bet on InnoCare Pharma.

In short, the patent cliff has become a hot potato for multinational pharmaceutical companies. As the WSJ put it, the pharmaceutical industry is facing its largest wave of patent expirations in decades.

The "old engines" are collectively sputtering out. Nearly every pharmaceutical company has at least one blockbuster drug set to lose patent protection within the next five years.

The question is: where is the next golden age for these giants?

In the second quarter of 2026, biopharmaceutical deal value soared to $114 billion, the highest since 2019. Meanwhile, biopharmaceutical private financing approached $15 billion, the highest level since 2021. Multinational pharmaceutical companies are using real money to try to find their way out of a desperate situation.

Chapter 1: On the Edge of the Cliff

The impact of this patent cliff is so broad that almost no major pharmaceutical company can escape it. But if one had to pick the company in the "most dangerous" position, the answer points to Denmark's Novo Nordisk.

According to statistics from market research firm Norstella, by the end of 2033, approximately 77% of Novo Nordisk's 2025 revenue involves products that will lose patent protection.

This proportion is the highest among all major pharmaceutical companies. The main reason lies with semaglutide — which has two brands: Ozempic for diabetes and Wegovy for weight loss. In 2025, Ozempic contributed nearly $20 billion in sales, and its core patent will expire in the early 2030s.

It should be noted that beyond the mainstream U.S. market, Novo Nordisk has already encountered setbacks elsewhere.

In March 2026, semaglutide's core compound patent officially expired in China, and at least 10 Chinese pharmaceutical companies have submitted biosimilar registration applications. The Canadian market was affected even earlier — Ozempic's patent there has already lapsed, and U.S. patients have begun purchasing the drug from Canada at lower prices.

When this "cross-border price gap" in turn undermines semaglutide's pricing power in the U.S. market, describing Novo Nordisk as mired in a swamp is not much of an exaggeration.

Merck's situation is also quite severe. As once the world's best-selling drug, Keytruda generated nearly $32 billion in sales in 2025, accounting for approximately 55% of Merck's pharmaceutical business revenue. Its U.S. patent protection will expire at the end of 2028, at which point Merck faces the risk of having more than half of its revenue source cut off.

Merck projects that Keytruda will reach peak sales of approximately $35 billion in 2028, then plummet sharply.

BMS, which also holds a PD-1 inhibitor, faces a "two-front battle."

On one hand, the U.S. patent for cancer drug Opdivo expires in 2028. On the other hand — and more importantly — the blockbuster blood thinner Eliquis will see its exclusivity reach its endpoint even earlier.

In 2025, Eliquis generated over $14 billion in revenue, accounting for 30% of BMS's total revenue. This drug is co-marketed by BMS and Pfizer, with profits split equally, so both companies will be affected. For Pfizer, Eliquis accounts for 13% of its total pharmaceutical sales.

More than 65% of BMS's 2025 sales face patent expiration risk, putting particularly intense pressure on it in the capital markets. It is therefore not hard to understand why, in May, BMS signed a strategic collaboration agreement with Hengrui Medicine involving 13 early-stage programs, with total potential deal value of up to $15.2 billion — using externally acquired pipelines to fill the revenue gap that is about to appear.

Chapter 2: Extending the Breath

Patent expiration means generics or biosimilars can legally enter the market, but "expiration" does not equal "immediate collapse."

Multinational pharmaceutical companies have a mature set of "life-extending" strategies, the core idea being to extend the market exclusivity of original drugs as long as possible while building a second line of defense with new formulations and new indications.

The most classic case comes from BMS's hematologic oncology drug Revlimid. The core patent for this drug expired as early as 2019, but BMS delayed generic entry by several years through a series of carefully designed patent settlement agreements.

In 2015, Celgene (later acquired by BMS) reached a settlement with Natco Pharma, allowing it to enter the U.S. market in "limited quantities" starting in March 2022, initially with only single-digit market share, rising year by year to about one-third by 2025. Unrestricted competition did not truly arrive until the end of January 2026 — a full seven years after the core patent expired. During those seven years, Revlimid's peak sales reached $12.8 billion in 2021.

Even more noteworthy is the pricing strategy. In 2022, when the first generic of Revlimid launched, it was priced at 86.4% of Revlimid — a discount of only 13.6%, far below the approximately 40% discount the FDA typically observes with a single generic competitor.

This "gradual" competition model allowed BMS to maintain considerable cash flow even after patent expiration.

AbbVie's autoimmune drug Humira is another extreme case.

Humira was the "drug king" for many consecutive years. By filing over 100 patents in the U.S., AbbVie built an impenetrable "patent thicket." Humira biosimilars did not launch in the U.S. until 2023 — five years later than in Europe. Humira brought AbbVie over $20 billion in revenue in 2021.

However, this "life-extending" strategy is facing increasing regulatory and social pressure.

The Revlimid settlement agreement triggered generic drug shortages. In 2024, the American Society of Health-System Pharmacists reported a shortage of generic Revlimid, with quantity restrictions cited as one of the causes. In recent years, the U.S. FTC has taken an increasingly tough stance on "reverse payment" settlement agreements, undoubtedly making it harder to replicate the Revlimid model.

Beyond legal means, pharmaceutical companies are also "doing things" at the product level.

Novo Nordisk is pushing an oral formulation of semaglutide. The oral weight-loss version of semaglutide (Wegovy tablets) received FDA approval in December 2025, launched in the U.S. in January 2026, and its China marketing application was accepted in August 2026.

Sanofi has formulated a "strong defense plan" for Dupixent. Dupixent's U.S. compound patent will expire in March 2031, but Sanofi says granted patents and pending applications for new formulations could extend protection to 2045. The company is developing a new formulation called "Q4" that extends the dosing interval from once every two weeks to once every four weeks.

Chapter 3: Buy, Buy, Buy

If patent extension is "defense," then M&A and BD are "offense." Facing the impending revenue gap, multinational pharmaceutical companies are launching a "shopping spree" at unprecedented speed.

In the second quarter of 2026, biopharmaceutical deal value reached $114 billion, the highest since 2019. Merck, AbbVie, and GSK all announced deals exceeding $5 billion during the year.

Entering the second half, multi-billion-dollar M&A deals landed in rapid succession: in June, AbbVie acquired Apogee for $10.9 billion, and GSK acquired Nuvalent for $10.6 billion; in July, Vertex spent another $10 billion to acquire Crinetics. Within just two months, three major all-cash deals landed — indicating that this wave of deal-making is unlikely to dissipate quickly.

Notably, the logic of M&A is undergoing structural change.

From 2021 to 2023, the core of multi-billion-dollar M&A was "buying single products": AstraZeneca's $39 billion acquisition of Alexion was about buying mature complement drugs Soliris and Ultomiris; Pfizer's $43 billion acquisition of Seagen was about buying two commercialized ADC products.

But with cases like Gilead's $21 billion acquisition of Immunomedics followed by Trodelvy's Phase III failure, and Pfizer's Seagen pipeline candidate Sigvotatug vedotin missing its Phase III target, the industry has seen the considerable risk of "betting on single products."

Current M&A standards have upgraded to "product + platform" dual anchoring. Buyers no longer look only at the sales peak of a single star pipeline; instead, they want to assess whether the target company has a sustainable R&D engine for continuously producing new drugs.

In January, Merck was reported to be in talks to acquire Revolution Medicines, with a potential deal price range of approximately $28–32 billion. If completed, it would be the largest pharmaceutical M&A deal in nearly three years since Pfizer's acquisition of Seagen. The valuation was so high because Revolution Medicines' platform has a series of follow-on pipelines in reserve.

Although that deal ultimately fell through, Merck did not abandon other opportunities. According to Merck CEO Rob Davis's remarks at an investor meeting in September 2025, the company will prepare for Keytruda's patent expiration through a dual-track strategy of "M&A + internal R&D," and "does not rule out the possibility of launching larger-scale transactions in the future."

Another multinational pharmaceutical company, Pfizer, also plans to invest $6 billion in BD budget in 2026, focusing on oncology and immunology. Strategically, it prefers "multiple small but precise" deals that can fill core gaps and provide long-term returns.

BMS has built a diversified pipeline spanning neuroscience, radiopharmaceuticals, and precision oncology through approximately $30 billion in transactions.

These figures indicate that, in the face of the patent cliff, aggressive strategic expansion has become a choice that pharmaceutical giants are making in unison.

Chapter 4: The China Opportunity

What does this round of patent cliff mean for China's pharmaceutical industry?

Just look at the numbers. In the first half of 2026, China's innovative drug BD outbound deal value alone reached $99.7 billion — approximately twice the full-year 2024 level. China's innovative drugs are moving from "following" to "running alongside," and in some areas even "leading."

Analysts believe the patent cliff facing MNCs is essentially a "self-rescue operation": as blockbuster drugs like Keytruda and Opdivo approach patent expiration, multinational pharmaceutical companies urgently need to replenish their pipelines — and Chinese innovative drugs have already achieved world-class competitiveness in areas such as ADCs, bispecific antibodies, and GLP-1s.

Behind this competitiveness lies structural advantage.

China has a vast patient population, with fast clinical enrollment and low costs; Chinese pharmaceutical companies' R&D capabilities in antibody engineering, peptide chemistry, and other fields are rapidly improving; leading companies such as Hengrui Medicine and CSPC Pharmaceutical Group have already built complete capabilities from target discovery to clinical development.

The BD transaction model itself is also upgrading. In earlier years, Chinese innovative drugs going global were mostly single-asset rights transfers, with the core logic being low price and fast progress. But several major deals in 2026 show new characteristics: multi-pipeline "bundled" transactions have become the norm, such as Hengrui Medicine's $15.2 billion deal with BMS involving 13 early-stage programs, and Innovent Biologics' $10.5 billion deal with Pfizer covering 12 oncology programs.

Even more noteworthy is that in the collaboration, Hengrui Medicine not only obtained exclusive rights to BMS's original research projects in China, but also retained the option to co-develop specific projects and the opportunity to jointly conduct commercialization activities with BMS globally.

The emergence of this Co-Co model (co-development, co-commercialization) marks a qualitative change in the role of Chinese pharmaceutical companies in the global value chain. From "selling green shoots" to "participating in global commercialization," Chinese innovative drug companies are beginning to truly enter the core circle of the global market.

Of course, challenges remain. The U.S. Congress is pushing to include biotechnology in the Comprehensive Outbound Investment National Security Act (COINS Act) of 2025, which could pose obstacles to cross-border collaboration and licensing transactions. Geopolitical uncertainty, the FDA's review standards for Chinese clinical data, and Chinese pharmaceutical companies' own shortcomings in overseas clinical development and commercialization capabilities are all thresholds that need to be crossed.

The patent cliff is a cyclical destiny of the pharmaceutical industry. At the same time, it is also an opportunity for the metabolic renewal of the innovation ecosystem.

For multinational pharmaceutical companies, this is a window period to trade capital for time — their industry position over the next decade will be reshaped by it. For Chinese innovative drug companies, this is a strategic opportunity period to trade capability for position — it will determine the true weight of China's pharmaceutical industry in the global landscape.

Therefore, it can be said: the cliff lies ahead, but the road is under our feet.

References:

• Pharma Industry Stares Down Biggest Patent Cliff in Decades

• Innovative Drugs Generate Nearly $100 Billion in Half-Year Outbound Revenue; Three Major Changes Reshape Value Chain