Between 2026 and 2033, a whole generation of blockbuster medicines – those generating over a billion dollars in annual revenue – will lose their exclusivity, opening the floodgates for generic drug manufacturers. For investors, it is worth taking a closer look at this topic.
The pharmaceutical industry is set to undergo a major shift. From this year until 2030, a host of patents protecting medicines will expire, paving the way for generics to enter the market. This is a nightmare for the big pharma companies concerned, especially as the situation will affect 68 blockbusters in particular – treatments generating over a billion dollars a year, according to the firm Evaluate Pharma. The US group Merck, for example, generated 57% of its $65 billion in revenue in 2025 from two blockbusters: the anti-cancer drug Keytruda ($31.7 billion) and the HPV vaccine Gardasil 9 ($5.2 billion). Both will lose their patents in 2028. The same applies to American multinationals Bristol Myers Squibb, a third of whose sales come from the anticoagulant Eliquis, which will no longer be protected from November 2026, and Johnson & Johnson, which generates 15% of its revenue from anti-cancer drug Darzalex, which will theoretically become biosimilarisable in May 2029. The list is far from exhaustive. It also concerns Swiss companies Novartis and Roche.
In the pharmaceutical industry, this phenomenon has an almost cinematic name: the ‘patent cliff’. The moment when, more or less at the same time (over a period of five to ten years), the formulations of numerous medicines fall into the public domain, thereby opening the door to generic versions, sold at significantly lower prices. “This is not the first time the pharmaceutical industry has faced a patent cliff. There have been others before 2026,” says Tjaša Lukšič, healthcare equity analyst at DPAM. “This phenomenon occurs when a class of innovative medicines sees its patents expire. The last time this happened was in the early 2010s, when many small-molecule blockbusters lost their patents. Today, it mainly concerns monoclonal antibodies.”
In total, the research firm Evaluate Pharma estimates that over $300 billion in revenue will be exposed to competition between 2026 and 2030. To put this in perspective, this total stood at only approximately $160 billion between 2021 and 2025, as well as between 2016 and 2020. While this period therefore poses a risk to the pharmaceutical industry, it represents a windfall for generic drug manufacturers. “We have just entered a golden decade for specialists in off-patent medicines,” emphasises Tjaša Lukšič. “The patent cliff represents a huge growth opportunity for them.” According to the analysis firm Precedence Research, the global generics market, which was worth $468 billion a year in 2025, is expected to grow 5% annually between 2026 and 2035, reaching $762.5 billion by that date. Grand View Research is even more optimistic, forecasting an average annual growth rate of 6.5% over the same period.
Given this context, has the time come for private investors to take a closer look at the sector? “The market for off-patent medicines is more attractive than it has been in recent years,” replies Tjaša Lukšič. If her enthusiasm is somewhat measured, it is because the market for off-patent prescription medicines is complex. “Unlike the pharmaceutical industry, which is extremely concentrated with six big pharma companies dominating the market, the generics sector remains highly fragmented, with a multitude of pure players and a few large pharmaceutical groups that have retained a dedicated division. All these players are engaged in an intense price war over certain products, which reduces their margins, whereas in the industry for patent-protected medicines, companies enjoy a monopoly until the patent expires, thereby benefiting from much higher margins.”
This phenomenon is particularly pronounced in the case of so-called traditional generics, i.e., small molecules synthesised through chemical processes, which are generally easy to copy. Semaglutide, the active ingredient in the anti-diabetic drug Ozempic and the anti-obesity drug Wegovy marketed by Novo Nordisk, is, for example, one such chemical molecule that is relatively simple to replicate. Marking the start of the patent cliff, this compound lost its patent in certain countries in March 2026.
“The generics industry boils down to an industrial process,” explains Jérôme Schupp, head of investment at Prime Partners. “The company that is quickest to bring a product to market – or even the second – takes the lion’s share. The rest have to make do with the crumbs.” A view shared by Tjaša Lukšič: “There are two ways for generic manufacturers to come out on top: either be first to market, or offer the best price.”
On this last point, Western companies are not best placed to win the game. As a result, India has established itself as the world’s pharmacy, with companies such as Sun Pharma, Dr Reddy’s and Aurobindo. “Indian companies dominate the generics market and many active pharmaceutical ingredients now come from Asia,” points out Tjaša Lukšič. At the other end of the spectrum, some Western players are losing market share. In 2025, for example, sales of generics by the global leader, the Israeli firm Teva, stagnated compared to 2024, while those of the American firm Viatris fell by 8%. Only Switzerland’s Sandoz managed to stay afloat, with a slight 2% growth in its generic sales over the period.
However, the situation is not without risk. During the pandemic in particular, Western countries were able to gauge the risk of becoming too dependent on complex and distant supply chains, as Remco Steenbergen, CFO of Sandoz, points out in the interview he granted us (read the interview). But keen to reduce healthcare spending, most Western countries prefer to put greater pressure on generic drug prices, making it increasingly difficult to produce certain products within their borders. In February 2026, for example, the Roche Group announced that it would cease production of its antibiotic Rocephin at its Kaiseraugst site in Aargau by 2030, marking the end of Switzerland’s last antibiotic production. The decision was driven by low profitability due to competition from generics, falling antibiotic prices and rising costs. Meanwhile, Sandoz received €28 million in aid from the Austrian government to increase penicillin production capacity at its site in Kundl, Austria.
Nevertheless, Western companies still have some cards to play. Alongside the mature market for traditional generics, a new market has emerged: biosimilars, the first of which was authorised in 2006. “Unlike traditional generics, which are small synthetic chemical molecules that are fairly easy to produce, biosimilars are copies of biological molecules produced by living organisms and are much more complex and expensive to manufacture. They require expertise that fewer companies possess,” explains Tjaša Lukšič. “By way of comparison, the cost of developing an innovative medicine, leading to a patent, is in the region of a billion dollars; that of a generic is a few million; and that of a biosimilar is around a hundred million.” Last but not least, the price of biosimilars falls less sharply than that of generics over time, ensuring better margins for their manufacturers.
At present, the biosimilars market accounts for only a small fraction (around 15%) of the overall market for off-patent medicines. However, its growth is outpacing that of the sector as a whole. According to the consultancy Marketsand-Markets, the biosimilars market, estimated at $32.7 billion in 2024, is expected to grow 7.5% annually between 2025 and 2035. “Biosimilars are a very interesting sector, with much higher barriers to entry than the generics sector,” summarises Jérôme Schupp.
An interesting fact: the golden decade that the off-patent drug industry is set to experience is linked to a class of biological medicines that revolutionised medicine some 20 years ago – monoclonal antibodies, which include, notably, the anti-cancer drugs Keytruda and Darzalex. Companies that know how to manufacture this type of complex molecule therefore have a clear path ahead of them. It is no coincidence that Sandoz has seen its share price soar by more than 75% over the past year (as of 1 April). In 2025, its sales from biosimilars rose by 15% compared with 2024. They now account for 30% of the Basel-based group’s revenue.
And that’s not all: the company has 32 biosimilars in development – the sector’s largest pipeline, according to the company – which are expected to underpin its growth over the next decade. “Sandoz is very well placed to capitalise on the growing biosimilars market, where margins are higher and competition is weaker than in generics,” says Jérôme Schupp. The Israeli group Teva is also on the lookout, with 13 biosimilars in development, as is the Indian firm Biocon, which in 2022 acquired the biosimilars division of the American giant Viatris for $3.34 billion.
However, the high cost of developing biosimilars has a downside, as companies tend to focus on replicating the highest-revenue drugs – the so-called blockbusters – to ensure they recoup their investment. As a result, biological treatments targeting small markets rarely face competition once their patents expire. “Approximately 100 biological medicines are expected to lose their exclusivity in Europe by 2032. Of these, 79% currently have no biosimilars in development,” highlights the US research firm Iqvia in a study published in January 2026. This represents a considerable loss of revenue for healthcare systems, given that biosimilars are sold on average 30% cheaper than the reference biologics.
