Pharma Companies Emphasize Pipelines as Patent Expirations Loom, Moderna Faces FDA Setback

Europe's biggest pharmaceutical companies are putting their drug pipelines on display as they face a so-called "patent cliff" in the upcoming years, where some of the world's best-selling drugs lose exclusivity in key markets, exposing them to competition from much cheaper generics. 2026 is shaping up to be a defining year following a dramatic 2025, and one where the impact from last year's developments is set to crystallize.

Novartis is about to lose $4 billion in sales and nearly as much in profits only in the first half of this year, marking "the largest set of loss of exclusivities in Novartis' history." Despite these losses, the company highlighted that due to "great growth drivers" and a "strong pipeline," they are still able to grow.

AstraZeneca appears to be equally confident in its pipeline, boasting potentially 25 new blockbuster medicines by 2030, when it also hopes to reach $80 billion in revenue, up from the $59 billion seen in 2025.

"With the scale of the patent losses that are coming up over the next few years, you probably are hearing a bigger focus on the optimism for the future, as opposed to near-term delivery," a senior partner at McKinsey stated.

Meanwhile, Moderna disclosed Tuesday after market close that the FDA sent the company what's known as a "refusal to file" letter declining to initiate a review of its seasonal flu vaccine candidate. The letter, signed by top vaccine regulator Vinay Prasad, took issue with Moderna's clinical trial design — particularly, he said, the "control arm does not reflect the best-available standard of care in the United States at the time of the study."

Moderna defended its decision to compare its mRNA vaccine against a standard-dose flu vaccine instead of one of the three high-dose options recommended for adults 65 and older. While the FDA had communicated its preference for that approach, the company said, reviewers also consider a standard-dose control to be "acceptable."

HHS hit back Wednesday, saying its guidance to Moderna was "very clear" and that the company put seniors in danger of severe illness by not using a more protective vaccine as the control. A senior FDA official suggested to reporters that Moderna gamed the trial to make its vaccine look better to regulators.

A company spokesperson called HHS's statement "an attempted distraction." "The FDA reviewed and cleared the trial design as adequate before the study began 18 months ago," she said. "The industry depends on clear, transparent rules that are applied consistently in order to make the long-term investments that benefit Americans."

The European Medicines Agency is reviewing Moderna's application, as are regulatory bodies in Canada and Australia, the company has said. The evaluation began on Jan. 22.

The FDA's refusal to file "is a substantial hit to the probability of success for" Moderna's seasonal flu shot and its combination flu-Covid-19 vaccine, with the latter's application expected to build on the standalone flu product, according to a health care analyst at equity research firm William Blair.

Many pharmaceutical companies are emphasizing the importance of their business development strategies as they are increasingly looking to M&A to help them find the next blockbuster drug. The phrases "strategic fit" and "bolt-on deals" have become go-to lines for the CEOs.

While some companies are targeting smaller acquisitions and early-stage assets, others are open to bigger, late-stage deals to bridge the gap. While companies can fill that revenue gap by developing drugs internally, going on a shopping spree often yields faster results.

Sanofi's CEO Paul Hudson learned that the hard way as his tenure as CEO came to an abrupt end on Thursday, closing out a six-year reign at the French company, during which his emphasis on R&D had failed to deliver speedy results. The current CEO at Merck KGaA will replace Hudson with the mandate to "strengthen the productivity, governance, and innovation capacity of Research & Development," Sanofi said in a statement.

Sanofi has been clear-eyed about the need to offset the patent expiry of its blockbuster asthma drug Dupixent, which currently accounts for more than a third of sales and will lose key patents by early 2030s.

With M&A becoming more of a focus for companies looking to replenish their pipelines, China has emerged as arguably the most interesting place to be right now. It has become a significant source of innovation, with several companies recently announcing deals with Chinese firms to secure access to assets being developed in the world's second-largest economy.

Ten years ago, deals with Chinese companies were extremely rare, but today, it happens all the time. "It has a lot to do with the end market – the end market today is primarily the U.S., and Europe is second," a portfolio manager noted. "Many see that the end market 10 years from now will probably be the U.S. and China."

Over the past year, the discussion has moved on from talking about China as a market, to a source of innovation. Companies are starting to look at it as a way to potentially de-risk assets, using China as "a platform to understand how the drug works in a very rapid way, knowing that they're doing their clinical development or their discovery development life cycles much faster than we are in Europe or the U.S."

On Thursday, the FDA approved a medical device used to treat adults with locally advanced pancreatic cancer. The agency said the device is the first of its kind. The device, made by Novocure, uses alternating electrical fields generated through adhesive patches attached to an electric field generator to help disrupt rapid cancer cell division. A clinical study underpinning the premarket approval found that using the device with standard-of-care chemotherapies improved overall survival by about two months compared with chemotherapy alone.