J&J reports today, just two weeks after Pfizer secured certainty on tariffs and drug pricing. Analysts expect to hear about plans from the rest of the industry during third period earnings calls.
The pharma industry is heading into the third-quarter earnings period with a tailwind, as key risks from tariffs to drug pricing show signs of abating and multiple high-profile M&A deals improve sentiment.
Analysts expect company executives to focus on some similar discussions this period, including planned manufacturing expansions in the U.S. and any efforts to address the president’s calls to lower drug prices.
As always, Johnson & Johnson kicked off the reporting period today. The company recorded 6.8% sales growth for the quarter to $24 billion, narrowly beating Guggenheim’s estimate of $23.7 billion. J&J now expects to reach $93.7 billion in sales for the full year.
Ahead of earnings, William Blair noted that the markets have improved across biopharma. The S&P Biotech Select Industry Index—known as the XBI—is up 18% year to date, after declining precipitously in the spring.
Pfizer helped clear the air for the entire industry with the late September announcement of a drug pricing deal with the Trump administration. Appearing at the White House, CEO Albert Bourla said that the industry was facing two overhangs: tariffs and drug pricing. Pfizer has agreed to offer a selection of its drugs at an average 50% discount on a direct-to-consumer (DTC) platform called TrumpRx, which has yet to launch.
“We view the recent agreement with the Trump administration as a strategic win-win that should benefit both parties, while also setting up a template for broader industry agreement,” Guggenheim Securities analysts wrote in an October 9 earnings preview.
Sure enough, Amgen followed Pfizer just a few days later with a deal to sell the lipid-lowering drug Repatha at a 60% discount via TrumpRx. AstraZeneca was the third Big Pharma to team up with the White House, announcing on Friday that its medicines will be featured on the yet-to-be-revealed TrumpRx platform in the future.
William Blair agreed in an October 10 note that the Pfizer deal cut “a significant amount of political risk” for biopharma companies. Pfizer sacrificed a small amount of revenue—Guggenheim estimates that company’s Medicare exposure is about 5% of U.S. revenues—in exchange for protection from tariffs. In the process, Pfizer, which will report earnings Nov. 4, secured certainty on both key policy overhangs, at least for itself.
“The third-quarter earnings cycle will therefore represent an important cycle for the industry, as more companies likely disclose their own plans for direct-to-consumer programs or other discounts, to go along with all of the announced manufacturing facility expansions,” William Blair wrote.
Drug Pricing Details Top of Mind for Amgen
In its deal with the White House, Amgen will sell Repatha directly to patients for $239 per month in a DTC platform called AmgenNow that somehow integrate with TrumpRx.
William Blair is hoping to hear more details from management about AmgenNow and whether the company will expand the offering to other products. The analysts also want to know what the impact on Repatha’s revenue may be. Elsewhere, Amgen’s management should expect questions from analysts on the weight loss drug MariTide. The second part of a Phase II trial is expected to readout sometime around November.
BMS Buzz Focused on Cobenfy DataBristol Myers Squibb also recently added more drugs to its existing DTC platform, BMS Patient Connect. That will certainly come up on the earnings call, William Blair said.
But the bigger headline for BMS will be the pending readout for Cobenfy in Alzheimer’s disease psychosis, which is expected by the end of the year. The analysts suggested that topline results could even be revealed with the third-quarter earnings release. Investors have been eagerly awaiting the Phase III ADEPT-2 trial after the therapy failed a late-stage trial in schizophrenia earlier this year.
William Blair is confident that the study will read out positively, which would bolster the long-term sales estimates for the drug. But BMO Capital Markets has lowered expectations for Cobenfy revenue in its existing schizophrenia indication as prescriptions have slowed heading into October. This has given BMO analysts “reduced confidence into earnings,” and the drug is expected to miss the consensus estimate of $48.2 million for the quarter by about 5%.
Merck’s Verona Buy To Raise Questions
Like all other pharms, Merck will face pressure on the drug pricing front, Guggenheim wrote on October 9. But more pressing for investors will be additional details on the recent acquisition of Verona Pharma, which closed last week.
Merck gained the chronic obstructive pulmonary disease drug Ohtuvayre in the transaction, which Guggenheim expects will rise to $3 billion in sales by 2032. “We believe the deal makes both strategic and financial sense for Merck and gives the company another growth driver as they work to navigate Keytruda’s upcoming decline,” Guggenheim wrote.
But it’s not enough to stop there, the analyst group warned. “[W]e still believe the company needs to continue pursuing additional business development opportunities, a sentiment that is supported by management’s recent commentary that BD remains a ‘key priority.’”
On Keytruda, investors will also want to hear more about the recent subcutaneous formulation approval, which is part of Merck’s franchise extension strategy, according to Guggenheim. The analysts are skeptical that Merck will achieve a stated goal of 30–40% market penetration 18–24 months post-launch. The main competitors to Keytruda are Roche’s Tecentriq and BMS’ Opdivo.
One place where Merck may see some regulatory relief is on Medicare price negotiations, as Keytruda was likely going to come into the cross hairs. But the One Big Beautiful Bill Act delayed the timelines from 2028 to 2029.
Novo’s Overhaul Teases ‘Evolving Business Strategy’
Novo Nordisk, meanwhile, will have its second earnings report with new CEO Maziar Mike Doustdar at the helm. He made some decisive plays over the third quarter, laying off 9,000 employees and announcing the $5.2 billion acquisition of Akero Therapeutics.
“We appreciate the momentum under Doustdar’s leadership and are looking to 3Q25 earnings to better assess the company’s evolving business strategy,” BMO wrote on Thursday.
