In March 2023, I published a controversial weekly, warning about investments in Big Pharma stocks. This group, often popular among retail investors for their dividends and pretend safety (size, diversification, proven, etc.), was already back then clearly facing a huge wall of painful patent expirations. As I had expected, many of the biggest — and most popular — names have seen their stocks painfully breaking apart while broader markets rose. Time for an update.
Summary and key takeaways from today’s Weekly
– Almost three years after my weekly about looming patent expirations, 3/4 of my chosen future losers indeed have performed poorly.
– However, the pain is unlikely to be over with the big LOEs being just around the corner.
– I explain the difference between mainstream Pharma / biotechs and my approach — my members have received multiple stock ideas from this this sector that are clearly ahead of the S&P 500.
In my respective weekly from 09 March 2023, titled “BIG PHARMA TO DESTROY SHAREHOLDER VALUE?“ (see here), I deep-dived into many popular Big Pharma and biotech stocks.
The reason: a big, if not the biggest modern, patent winter was coming.
It was so special, because many companies all at once were facing these challenges some time during the 2020s. A loss of exclusivity, or LOE in brief, is no issue if a company is broadly diversified, the affected drug does not generate the bulk of total sales and profits, not multiple and big parts of the lineup face LOE simultaneously, and / or if the pipeline is strong enough to compensate coming sales losses.
Of course, my intention was not to talk anyone out of Pharma and biotech stocks entirely. In fact, I have presented myself in my view lucrative Pharma and biotech ideas (including one reactivation of a previously closed case) in my member-exclusive research reports. First slowly a few, during 2025 then at a higher pace — and not necessarily weak picks so far!
But certain of the big, popular names were clearly running into trouble.
The writings were on the wall. With only a little bit of research, the riskiest and most-likely-to-disappoint names could have been uncovered — and avoided! Maybe “disappointing” is a too-mild word, think of massive destruction of shareholder value. I expected two things, a huge wave of deal making trying to replenish weak pipelines and for certain names breaking-away stock prices.
Today, I want to take a look back, reassessing the status quo almost three years later, and distilling the core essence — what can we learn from this foreseen debacle, and more important: where to look now before the retail crowd jumps in?
If you’re looking for attractive, overlooked stock ideas the majority has a blind eye on, look no further. I am offering compelling non-mainstream cases in concise 12-page member-exclusive reports.
Want to outsmart the market? Get active now! Become a supporting paid-member and receive my best stock ideas (plus updates).
The average total return of my best stock ideas is ahead of the S&P500 and the Dow Jones. With my risks-first approach (paired with high upside), I am able to find stocks with great returns.
Join me and my members on our journey to beat the markets!
both as per 03 December 2025 market close – since August 2022
When the medicine causes headaches
In my previous weekly, I explained a few mechanics of the sector, finishing with an overview about looming big patent expirations everyone should be aware of — if interested and especially invested in this “defensive” sector.
Financial-Engineering readers know what I think of “defensive” and “proven” ideas — not seldom it is exactly the opposite. The more so if everyone knows and recommends these names as core foundations for a pretend low-risk portfolio on popular platforms.
Well, the opposite was true.
I had chosen the stocks of AbbVie (ISIN: US00287Y1091, ticker: ABBV), Merck (ISIN: US58933Y1055, ticker: MRK), Bristol-Myers Squibb (ISIN: US1101221083, ticker: BMY), and Pfizer (ISIN: US7170811035, ticker: PFE) as my victims, expecting huge disappointments in the future.
I think now, after almost three years, we can draw a first conclusion.
In three out of four cases concerning the names above, I was spot on. Only AbbVie has pulled out of the affair successfully, returning 52% (without dividends) — I recognize defeat. They managed to overcome the LOE of their gigantic blockbuster Humira which generated ~20 billion USD or roughly 40% of total sales at the peak in one year.
Nonetheless, I am happy to have achieved such a strong hit rate. In that weekly, I was more interested in pointing towards likely coming disasters with risks so obvious and with such big potential consequences.
Here is the performance of these four against the S&P 500 since my weekly went live.
Not counting dividends is likely a bit unfair, but I am not here to preach socialism.
If a pick is great, then the dividend is usually a bonus on top of the underlying business expansion. In my view, a dividend shall not be the sole performance driver.
We talked about AbbVie.
Merck closed second-placed with –6%, after a strong run as of late. In between, it looked dire and honestly, I am not so sure the stock will be a big success over the next quarters and years. Merck’s Keytruda is the most successful drug of all time. The cancer therapy generates about 30 billion USD over several indications annually and is still growing with about 10% per year.
However, patents expire in less than three years.
Keytruda contributes almost half to total sales.
Although Merck has launched successfully a new therapy of the name Winrevair (for PAH, my members are familiar with that) which quickly achieved a run-rate of a billion USD, this is a drop in the ocean compared to 30 billion USD.
The thing is, other therapies are also experiencing challenges like the HPV vaccine Gardasil, responsible for 10% of total sales (after the –24% drop last quarter due to issues in China).
Since 2021, Merck has spent 40 billion USD for acquisitions, hoping to hit the jackpot. 10 billion alone this year for an approved therapy, yes. But a high price tag, buying future growth that may be too far away in the future. The acquired drug generated less than 180 million USD in the first half of 2025, just for reference (see here).
Merck accumulated almost 40 billion USD in long-term debt.
It will be a tough adventure and likely a tight race as it takes years until even the most successful therapies gain traction. If you think, I am too pessimistic and over-exaggerating, I think I might even be too positive. Just have a look at the patent expirations for Merck — huge parts of the now sales- and profit-generating drugs are falling off the cliff in the short- and medium-term in the most profitable market U.S.
Around the world, we’ve already seen many LOEs. Merck has yearly sales of more than 60 billion USD.
Coming to Pfizer and Bristol-Myers Squibb which are very popular for their high dividends, but infamous for their devastating destruction of shareholder value that most retail investors cannot explain (from what I’ve observed).
Pfizer delivered –36% and BMY –27%, respectively.
And this might be only the beginning, as LOEs and highly levered balance sheets make sudden turnarounds out of nowhere unlikely.
If you thought, no worries, Pfizer is a solid long-term pick with temporary headwinds, I’d like to point towards the following. PFE stock trades today where it was almost 30 years ago.
And there are a few good reasons. Even sooner than Merck’s, Pfizer’s key patents are about to expire soon.
Between now and 2027, practically the entire top-shelf breaks away, except the growingly unpopular Covid treatments which created special one-time windfalls.
Here are the patents in chronological order of their U.S. expiration.
Let’s now check the importance of these drugs. I framed the key ones below.
Without having too count everything to the penny, it becomes apparent that almost all the blockbusters are about to lose exclusivity soon.
No wonder, Pfizer has been shopping aggressively. As I guided in my weekly back then, the big guys will have to open their wallets widely. Pfizer desperately did that. Net debt has risen to 47 billion USD.
I have no clue how they intend to replace the coming sales loss. Although Pfizer is “diversified”, when it comes to the amount of therapies, it does not help when half the portfolio by sales will experience a massive erosion over the next years.
To make it clear, sales don’t go to zero. But generics and biosimilars will be allowed to enter the market, creating massive pricing pressure.
The market has sent the stock lower, and rightly so.
And finally, Bristol-Myers Squibb, which itself is the result of multiple mergers of back-then big companies. If you read Peter Lynch’s old books from around the early 90’s, you’ll notice that the name fragments were separate companies in those days.
But looking at today and especially tomorrow, BMY stock has been falling for a reason either. Below, are the two key patents you should know, both losing exclusivity in 2028 in the U.S.
These two drugs generate a bit more than 50% of sales. But it’s worse than that.
What I framed below in red is their “legacy” portfolio. I have done that because most of these drugs stem from one of the biggest acquisitions in the sector, when BMY bought Celgene for the pocket change of 74 billion USD in 2019. Celgene was a company I had been actively covering back then as it was a strongly growing biotech.
However, with relatively short patent protection.
As you can see, the former pulling horse, blood cancer therapy Revlimid, is breaking into dust sales-wise. It peaked at 12.8 billion USD in 2021 and will have difficulties reaching three billion this year. But also most of the other names from the legacy portfolio (and from the Celgene deal) experience falling sales already now.
Just to get a feel for what can happen after patents expire.
Quickly glancing over the portfolio, I cannot find any suitable and promising therapies that could jump into the huge sales loss. If you need an example of stupid empire building and presenting huge headline numbers, you can think of this one.
Below, we can see in 2019 the Celgene deal (the rest was paid in equity), and a recent similar-sized deal when it comes to the cash component at least.
So, the deal making is there. A highly levered balance sheet, too!
The prospects? Do not need much explanation. Although BMY currently generates 15 billion USD in FCF, this will crumble soon.
What will likely be left once these key patents expire — for all discussed companies, not just Bristol-Myers Squibb — is highly indebted companies with massively lower sales and cash flows. And assets they acquired for insane sums. Maybe one or the other will pay off and justify the price tag in retrospect.
But it is not likely new drugs will compensate for huge sales losses, not even close.
And it is sure that not every deal will result in an huge success. Even if a mega blockbuster were among the rising stars, it will take many years beyond the LOE dates to gain meaningful traction. So being realistic instead of too optimistic, I’d clearly stay away from these names, at least for now. If the balance sheet were clean, we could maybe talk. But not with these setups.
And there’s another big IF: Potential TrumpRx price erosion.
So, even if promising drugs make it to the market, who says they will be able to achieve similar sales and especially profit dimensions like the old blockbusters? This is clearly an additional risk factor.
Although it seems that I am painting a dire picture here, I have recognized AbbVie as a successful turnaround. I have not participated in that. The same with another big and popular name, Amgen (ISIN: US0311621009, ticker: AMGN), one of the best diversified and indeed “safest” biotechs out there.
Saying the performance was not spectacular is factually right, but it misses the mark in my view. No big NEGATIVE surprise is a better description.
Checking pages 3 and 6 of the annual report of Amgen (see here), we can see that they have no imminent huge patent expirations in front of them, and they are immensely diversified.
As it is a household name and on top has a too-high leverage for me (almost 4x FCF), I am passing on this one. It’s diversified, yes. But it is not a clear and simple case, not easy to understand, and competing in highly competitive areas of treatment. Plus the debt component. And, am I not interested in diversification.
What I have published for my members instead, are stock ideas that have significantly other drivers, catalysts, and setups. They are much smaller companies, but cleaner and easier to understand setups, while not facing any destructive debt or LOE walls. And they are all potential multi-baggers, not just I-collect-my-dividends-and-hope-for-back-to-zero plays.
Let me explain my approach and give you a few numbers so that you can see the difference.
Even though many of the big catalysts haven’t even played out, yet, my eight cases (both memberships, one case used twice, as I reactivated it earlier this year) have on average returned 36% so far vs. the S&P 500’s 21% in the same period.
And the best thing about it, only one case is currently deeper in the read (despite huge net cash and a highly profitable business), performing below expectations. I am keeping it nonetheless, as the valuation is simply too low and the company has realistic potential catalysts.
Serious research is worth it — as I have shown above with the “safe bets”. I have no money graveyards among my member-exclusive picks, except the one mentioned. Among the rest:
- almost all picks in the green
- Two names have returned so far more than 60%
- one of them even more than 150% in just a few months
And as said, the big catalysts are coming next year, when multiple high-profile readouts from clinical trials will be presented. Also, my members and I will likely get to know more about new drug applications for new best-in-class therapies in niche areas with little to no competition.
This is the key sentence.
I am not fishing in highly competitive mass markets, no matter low lucrative they might be for a certain period. But when (short-lived) patents expire, the companies are hit hard and even before forced under pressure to acquire new growth assets as they usually don’t come up with own inventions that are big enough to move the needle.
If you understand this difference and appreciate my approach, now is a good time for you to join my paid memberships. It is up to you! Do you want to follow the sheep to the slaughterhouse, wondering why your (for me obvious) low-profile setups don’t turn around?
Or, if you want the full Pharma and biotech exposure, I recommend to join Premium PLUS as I have published some of my highest-profile cases exclusively there.
I laid out my arguments. Now, it’s your turn.
Conclusion
Almost three years after my weekly about looming patent expirations, 3/4 of my chosen future losers indeed have performed poorly.
However, the pain is unlikely to be over with the big LOEs being just around the corner.
I explain the difference between mainstream Pharma / biotechs and my approach — my members have received multiple stock ideas from this this sector that are clearly ahead of the S&P 500.
By becoming a Premium or Premium PLUS Member, you get instant access to all my already published research reports as well as several updates.
Likewise, you qualify for eight, respectively four more exclusive reports with my best investment ideas plus updates on the featured businesses over the next twelve months.