During the pharma earnings season, which begins on Tuesday, Novo Nordisk will report the first revenue numbers from an oral GLP-1 medicine, while other companies are expected to address the FDA, drug pricing and Trump’s new tariffs.
The pharmaceutical industry is floating into the first quarter earnings reporting period on a wave of M&A action as regulatory and policy pressures continue to ease.
Analysts and investors will be looking for more details on business development strategy as recent deals reset plans across the industry’s C-suites. Other topics could include recent personnel changes at the FDA, drug pricing, the midterm elections and tariffs, William Blair predicted.
The broader economy has struggled amid geopolitical tensions due to the U.S.-Iran war. But biopharma has provided a bit of a safe haven, BMO Capital Markets said in a Monday morning note. The Q1 earnings period will set the tone for the year to come.
“While investors have sought relative safety in some of our larger cap names (GILD/MRK/PFE/BMY), 1Q26 earnings could create more volatility for the sector as analysts look to further refine estimates for the fiscal year,” BMO wrote.
The first quarter is never the most lucrative for biopharma. Sales slow as patients’ insurance resets in the new year, multiple analyst firms explained. But most companies factor that into guidance, meaning the rest of the year sees growth, Truist said in a note last week.
“Historically, the first quarter of the year is generally the lowest contributor to full-year revenues and operating profits for biopharma companies, as inventory dynamics, insurance reverification, and deductible resets all impact product revenues,” William Blair wrote on Monday.
Investors, however, have come to expect this. And the industry is riding into the first quarter period on a high after 15 of 17 major pharmas tracked by William Blair beat consensus in the fourth quarter.
“We believe the continued earnings growth and defensive nature of the biopharma industry can continue to drive outperformance in the face of global macro uncertainties,” William Blair wrote.
Moreover, some of those uncertainties have started to resolve. While the White House’s announcement last week of up to 100% tariffs on pharmaceuticals was an unwelcome return of the controversial levies, Truist does not see much impact across biopharma given the many carveouts. Rather, the settling of this issue, as well as drug pricing initiatives for now, has helped to spur more deals across the sector.
“This clarity has helped unlock a pickup in M&A, with portfolio rationalization, carve‑outs & bolt‑ons accelerating as companies continue to work to defend patent cliffs & franchise moat,” Truist wrote.
Indeed, M&A activity ticked up at the end of Q1, with second-, third- and fourth-biggest deals coming in the last week of the quarter, as Eli Lilly, Merck and Biogen bolted on Centessa, Terns and Apellis, respectively. All told, the industry spent about $46.8 billion on acquisitions across 19 deals in the first three months of the year.
Pharma by pharma
Johnson & Johnson, as always, kicks off the reporting period. On the company’s Tuesday call, Guggenheim expects to hear an update on immunology med Tremfya’s volume growth and early launch results for psoriasis therapy Icotyde. Guggenheim is also hoping to hear more on J&J’s business development and pipeline strategy after the pharma’s two deals last year: a $14.6 billion outlay for Intra-Cellular Therapies and the $3 billion acquisition of Halda Therapeutics at the end of the year..
The industry will also see the first numbers on an oral GLP-1 medicine from Novo Nordisk, which launched the Wegovy pill at the beginning of the year. The company has reported strong prescription uptake, and now the Danish company should have some revenue to report as well.
This will be the first and last quarter that Novo has enjoyed a competitor-free market in the oral class. Eli Lilly received approval of Foundayo on April 1 and officially launched the product on April 9.
The weight loss market has also switched to a volume play, as competition has driven prices down significantly. Both Novo and Lilly have priced their products low enough now that more people can access the medications outside of insurance. This could impact year-over-year results for both companies, BMO noted.
With lower prices for the weight loss drug Zepbound playing out this quarter, Lilly could outweigh some of the pressure thanks to international expansion of diabetes drug Mounjaro, BMO said.
Over at Amgen, executives will continue to face questions about its obesity therapy MariTide, which is well behind leaders Lilly and Novo yet continues to generate buzz. Truist said the asset still appears to be commercially viable, with a launch date potentially in 2027.
Pfizer will also have plenty to say on obesity, as the company is anticipating data from the Phase 3 VESPER-3 trial of PF-3944, an asset acquired via Metsera last year. Investor focus will be on the therapy’s tolerability profile, according to Guggenheim.
The New York pharma’s vaccine work is also under pressure, particularly the COVID-19 shot Comirnaty and pneumococcal franchise Prevnar. BMO said that inconsistent recommendations from the Department of Health and Human Services on vaccines are continuing to create confusion for companies in the space. Besides Pfizer, these policy pain points are impacting Moderna and BioNTech.
Merck, too, could see some volatility as recent Centers for Disease Control and Prevention recommendations have impacted the RSV space. Merck has high inventory of its RSV antibody Enflonsia, the firm noted.
Merck should also anticipate questions about its recent purchase of Terns Pharmaceuticals, a highly anticipated biotech that ultimately earned an exit value of $6.7 billion. But documents recently revealed that the value went down by $1 billion after Merck’s team got a glimpse at some trial data.
Guggenheim expects to hear about how Terns’ assets, and those from the $10 billion acquisition of Verona Pharma last year, will be integrated as Merck manages the patent cliff from mega-blockbuster Keytruda.
Gilead, meanwhile, just struck three deals in quick succession. Executives held a special call last week to discuss the strategy, stressing that the pace did not reflect a change in strategy or sense of urgency. The business development team simply found the right companies around the same time.
While analysts are rarely satisfied and may bring up the M&A topic again, Truist is looking for details on the launch of Gilead’s HIV medicine Yeztugo as well as anito-cel from the Arcellx partnership-turned-acquisition. The cell therapy is expected to receive approval at the end of the year.
As for smaller biotechs, analysts from Stephens see the recent M&A rush as encouraging other exits in the space. “If the current cadence of M&A persists (and we think it can), it should continue to underpin sentiment and, at the margin, help reopen the IPO window in a more meaningful way over the coming quarters,” the firm wrote in a Thursday note.
