According to Boston Consulting Group (BCG), biopharma companies are facing mounting pressure from pricing reforms, tariffs, and a looming patent cliff that could put roughly $275 billion in revenue at risk across the top 15 players.
BCG’s report found that the sector’s average total shareholder return was flat at 0% from 2021 to 2025, compared with 16% for the S&P 500 over the same period. Only six of the top 20 companies outperformed the broader market during those five years.
The firm pointed to the combined effects of U.S. tariffs on branded medicines, provisions under the Inflation Reduction Act, and the possible expansion of most-favored-nation pricing models as factors intensifying margin pressure and raising uncertainty around the long-term sustainability of current business models.
Innovation remains heavily concentrated in blockbuster therapies, which accounted for nearly 90% of 2025 sales among the top 20 companies. However, the industry’s focus is shifting toward treatments targeting large patient populations, including obesity and Alzheimer’s disease.
More than 100 obesity drug candidates are currently in development, including over 35 that incorporate a GLP-1 component, adding to competition in already crowded pipelines.
At the same time, deal activity is picking up. Mergers and acquisitions are increasingly focused on marketed products and post-proof-of-concept assets, while licensing deal values are climbing even as overall deal volumes decline.
China accounted for nearly half of global licensing activity in 2025, underscoring its expanding influence in biotech innovation. The country now contributes around 30% of the global biotech pipeline and roughly half of newly developed antibody-drug conjugates. Meanwhile, India is gaining traction as a center for artificial intelligence, data capabilities, and pharmaceutical manufacturing.
Geopolitical dynamics are also reshaping supply chains and manufacturing strategies. Major drugmakers have announced plans to invest more than $350 billion in new U.S. manufacturing capacity by 2030 in response to tariff risks and supply chain vulnerabilities.
Rising commercial complexity and tighter pricing controls are prompting companies to accelerate product launches, adopt AI-enabled sales strategies, and explore direct-to-patient and direct-to-employer distribution models.
Seven of the top 20 companies have unveiled cost-optimization programs targeting reductions of 5% to 16% in operating expenses and workforce cuts ranging from 2% to 8%, as firms work to protect margins while selectively investing in digital and AI capabilities.
BCG concluded that traditional scale advantages in research and development and commercial operations are eroding, forcing biopharma companies to rethink their business models across the value chain to maintain growth and competitiveness.