Thierry from arvy
CFA, Co-Founder & CIO of arvy, Quality Investing
Sandoz is entering a golden decade for biosimilars as innovator drugmakers face their biggest patent cliffs in decades. Q2 net sales rose 9% to $3.01 billion, slightly above the $2.99 billion consensus, and biosimilar sales rose 22% at constant currencies after 18% in Q1, a trend the company expects to continue all year. Biosimilars sell much cheaper because they carry little R&D cost, and Sandoz benefits as drugmakers such as former parent Novartis lose exclusivity. x.comÂ
Sandoz is positioned to catch the revenue Big Pharma loses in the largest patent-cliff wave in pharmaceutical history. Between 2025 and the early 2030s, blockbusters with over $200 billion of annual sales lose exclusivity, and that cliff is Sandoz's order book, making it a natural hedge to Big Pharma. Its steady generics business funds the kicker, biosimilars, which grew 18% in Q1 2026. The biosimilar market is projected to grow from $25 billion in 2023 to $122 billion by 2032. x.com x.com x.com x.comÂ
Sanofi is a strong buy at about $46 because Dupixent looks more durable than the market assumes, and the stock trades at roughly a 40% discount to the industry. Dupixent, about 40% of revenue, beat expectations by 8%, and Sanofi argues biosimilars won't arrive before 2033 rather than 2030, with a monthly version due around 2030 to extend the franchise. Sales beat by 3%, EPS by 6%, and 2026 guidance was reaffirmed. The main threat is Apogee's rival drug dosed twice a year. x.comÂ
Small- and mid-cap biotech looks like one of healthcare's more asymmetric setups after a four-year bear market, as AI speeds drug discovery and Big Pharma faces a patent cliff. Over $300B of pharma revenue goes off patent in the next few years, M&A is already ramping hard as pharma hunts for assets, and many small and mid-cap names still trade at reasonable valuations, making them potential takeover targets. x.comÂ
Novartis looks solid on positive Phase 3 data for multiple sclerosis, a significant disease. It is a slower mover with a good chart, a defensive pick as the market looks weak, with yields rising, the dollar and oil breaking out and the VIX strong. x.comÂ
Novo Nordisk's AI partnerships won't pay off in the stock until its R&D bill starts behaving differently. R&D rose from DKK 14.2bn in 2019 to DKK 52.0bn in 2025, from 11.7% to 16.8% of sales, and 2026 brought a failed ZEUS trial, DKK 6.3bn of pipeline impairments and sales guided at 0% to -6%. The stock fell hard on those events but barely moved on the OpenAI, AWS and Anthropic deals. Disclosing a metric like time from target to first human dose would make them priceable. x.comÂ
Bristol Myers Squibb and Merck look expensive given the market's optimism about their patent cliffs. Bristol Myers trades at 13x and Merck at 16x 2028 EV/FCF, versus Regeneron at 9.5x, which is ridiculous. As @PCM_bio notes, Opdivo loses exclusivity in 587 days and Bristol has done little to address that or its other patent expirations. x.com x.comÂ
