The pharmaceutical industry is entering the second-quarter earnings season buoyed by a surge in mergers and acquisitions, with fewer regulatory headwinds than in previous periods, according to a July 15 report from BioSpace.
Truist Securities told investors in a July 7 note that the XBI fund, which tracks biotech performance, has returned to pandemic peak levels. The firm expects revenues across the sector to rebound after a typically slower start to the year. Truist also said analysts are watching for updates on major acquisitions and new data readouts. “We continue to sense easing concern toward regulatory and policy factors, previously top of mind, into the midterms,” Truist wrote, following the May exit of former Food and Drug Administration Commissioner Marty Makary.
Recent months have seen significant deal activity in biopharma, with mergers and acquisitions reaching an estimated $80 billion so far this year. Notable transactions include Sun Pharma’s $11.75 billion acquisition of Organon, AbbVie’s $10.9 billion purchase of Apogee, GSK’s $10.6 billion buyout of Nuvalent Bio, and Vertex’s $10 billion acquisition of Crinetics—all completed in the second quarter.
Analysts are closely monitoring developments in obesity treatments as that market is projected to reach up to $200 billion next year. Eli Lilly remains under scrutiny for its obesity drug portfolio; its newly approved weight-loss pill Foundayo saw a slower-than-expected U.S. launch but is viewed by Truist as having “substantial potential” internationally. Novo Nordisk’s oral Wegovy reached one million patients within 16 weeks on the market.
Other companies facing challenges include Amgen—which has been asked by regulators to withdraw its rare disease drug Tavneos—and Regeneron, whose LAG-3 inhibitor fianlimab did not outperform Merck’s Keytruda in late-stage trials for melanoma. Despite these setbacks, analysts expect Regeneron may exceed consensus earnings estimates due largely to sales from Dupixent.
Looking ahead, Truist anticipates robust deal activity will continue through the rest of 2026 alongside optimism about new product launches and clinical trial results.
