VALUE: After Hours (S08 E02): 2026–2030 Patent Cliff: Biggest in Pharma History

During their recent episode, Taylor, Carlisle, and Andrew Summers discussed 2026–2030 Patent Cliff: Biggest in Pharma History. Here’s an excerpt from the episode:

Now, the one thing that I would point out, and I think this is incredibly important, and it’s more of a macro-observation. But we’re sitting here today in 2026. Between 2026 and 2030, there is a pretty significant patent expiration wave affecting large-cap pharmaceutical companies. In fact, it’s the biggest patent expiry wave the industry has ever seen. So, just to throw something out there at you, of the top 10 pharmaceutical companies around the world, 5 of those ten are going to lose 50% of their revenues between now and 2030.

So, if you appreciate that as a backdrop, you’ll understand why more M&A is coming. [chuckles] It’s very obvious the way that these companies are going to get out of this hole is by acquiring the innovation that’s happening in biotechnology today. And so, I’m very optimistic that we’re at the beginning of a multi-year wave of M&A. And alongside that, of course, is this innovation cycle that I just described, which I think will feed that M&A cycle.

Tobias: At the risk of revealing how little I know about healthcare, what are the impacts of mRNA or AI on– I know those are two different things, but–

Jake: What are you talking? [chuckles]

Tobias: I don’t mean together. mRNA is a– I guess that’s a five-year-old technology now, but that seemed to be like something that might spur an innovation cycle if it’s a different way of delivering a drug, and then AI is a different way of analyzing the data. I did preface that by saying at the risk of illustrating how little I know about healthcare. [chuckles]

Andrew: Yeah, those are pretty broad topics. I don’t know that I’m qualified necessarily to give you an opinion on mRNA and the impact that’s going to have. That’s a really small subset of biotechnology. The innovation that we’re seeing is pretty broad-based actually across different therapeutic categories within healthcare. We are seeing some leading-edge technologies emerge in oncology, specifically immunology, some other areas that are driving some of that innovation. But I don’t–

AI, you know, that’s also pretty broad. Companies are using AI now in their of early-stage modeling of molecules that they’re looking at bringing to the market or bringing into development, which I think over time will increase the hit rate or decrease the development risk of those assets. But I think it’s still pretty early days as far as how that’s being utilized inside of drug companies to improve their hit rate, if you will, for drugs that they’re developing. But it is certainly coming and it’s certainly going to be something that you’re going to see more usage of over time.

Jake: How about GLP-1s as a massive headwind actually for all of the– If they do what they say they do, which is fix a lot of chronic diseases of abundance that I think is what the healthcare system addresses a lot of those today. If GLP-1s actually do eliminate some of those chronic issues, where does that leave us then for– Is there as much healthcare as we need then if we’ve gotten better at the very upstream part of it?

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VALUE: After Hours (S08 E02): 2026–2030 Patent Cliff: Biggest in Pharma History

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