New Report from BCG Explores Challenges and Strategic Shifts Ahead for 2026 That Could Further Erode Pharma’s Longstanding Social Contract
BOSTON—Biopharma enters 2026 amid continuing scientific progress and accelerating deal activity, yet its business model is under pressure across every facet of the value chain. Investors are taking note: average total shareholder return (TSR) across the sector flatlined at 0% from 2021 to 2025—compared with 16% for the S&P 500—and only six of the top 20 firms outperformed the S&P 500 during the period.
Many of the traditional advantages of commercial scale and R&D heft are being worn away. The combination of challenges is forcing companies to rethink business models and margin protection, including shifting priorities in R&D and business development in ways that could add fuel to the public’s declining approval of the industry and further erode pharma’s longstanding social contract (with the industry innovating and delivering new therapies in exchange for investment and commercial success).
These are among the findings of a new report from Boston Consulting Group (BCG) released today. Titled Biopharma Trends 2026: Pressures Mount—Now and into the Future , the report explores the structural shifts at work, from market access and geopolitical fragmentation to AI adoption, manufacturing reinvention, and evolving R&D and M&A strategies.
“Scientific momentum is not the issue,” said Priya Chandran, BCG managing director and senior partner, and coauthor of the report. “The challenge is ensuring that commercial models, access pathways, and global strategies keep pace with the breakthroughs coming out of labs.”
New pressures are converging across the value chain, including new US tariffs on branded products and continuing impacts from the Inflation Reduction Act. The most significant pricing pressures are coming from most-favored-nation (MFN) pricing proposals and deals in the US which affect both the US and non-US markets, and create the potential for big changes in global access to drugs. These pressures add to a steep patent cliff that is putting an estimated $275 billion in revenue at risk at the top 15 companies due to loss of exclusivity.
Trade policies are also reshaping sourcing and manufacturing. The promise of US tariffs of 100% on branded pharmaceutical imports unless companies meet “shovel in the ground” exemptions has catalyzed a dozen of the sector’s largest players to announce plans for over $350 billion in new US facility investments by 2030.
At the same time, China and India have become central to the biotech ecosystem.
- China has become an established innovation hub, especially in certain modalities such as new antibody-drug conjugates, and contributes about 30% of the global biotech pipeline.
- Licensing deals involving China represented nearly half of global activity in 2025. Valuations of Chinese assets soared 150% in the last year, outpacing those of both EU and US companies.
- India continues to be an active destination for offshoring capabilities, both on its own merits and as a means of offsetting geopolitical risk from China.
- India is emerging as a hub for AI, data, and manufacturing capabilities, as well as a source of diversified innovation, with companies investing across all stages of the value chain.
A disproportionate share of biopharma sales (almost 90% in 2025 for the top 20 firms) comes from blockbusters or mega blockbuster drugs, a trend BCG expects will hold steady through 2030. But the types of products that the industry is banking on to drive this growth are changing. From 2010 to 2020, many biopharma companies targeted development of biologics and novel modalities such as CAR-T, siRNA, and gene therapy, that targeted diseases affecting smaller populations. Since 2020, there has been a re-emergence of therapeutics targeting diseases affecting large populations with high unmet need, such as GLP-1s for obesity and monoclonal antibodies for Alzheimer’s. This can lead to a kind of herd mentality in pipeline decision making. For example, there are more than 100 obesity compounds in the industry pipeline, and more than 35 have a GLP-1 component.
M&A in the sector is on the rebound, with a sharp shift in focus. Average deal value rose in 2025 even as volume declined, with growth driven by marketed assets and major players accessing a more globally diverse biotech ecosystem. Companies are looking for derisked proof-of-concept or post-POC assets. Preclinical companies have collapsed in value from an average of about $500 million in 2021 to less than $50 million today, a reversal of the 2010–2020 trend that favored early-stage innovation.
In licensing, the value of agreements is on the rise while the overall number is declining, and there is significant year-over-year growth in the share of Phase I and II deals.
Rising prices and go-to-market complexity have made commercialization and patient access more challenging than ever before. The most significant pricing measures are coming from MFN pricing proposals and deals with the US, which affect both the US and non-US markets and create the potential for big changes in global access to drugs.
Selling products is also increasingly complicated. Health systems are instituting more complex procurement and approval processes and it has become more difficult for pharma sales teams to access individual physicians. In parallel, advanced therapeutics are shifting to more accessible sites of care, and more complex assets are administered in community, outpatient, and home settings.
Companies are responding to these changes in multiple ways, including turning to faster product launches, AI-driven sales strategies, and consumer-style patient engagement through direct-to-patient and direct-to-employer models.
Margin pressures and the promise of AI are compelling pharma companies to rethink their talent and resourcing models. Cost discipline has become a core capability. In the past year, seven of the top 20 firms announced major cost optimization programs, targeting cost reductions of 5% to 16% in the cost base and 2% to 8% in the workforce.
Companies are hopeful that AI can help improve organizational efficiency and preserve margins. Sales teams are already being revamped with new ways of working and AI tools. Longer term, there is potential for AI to augment talent and transform virtually every part of the value chain, including drug discovery, trial design, manufacturing, patient support solutions, and health care professional engagement. For instance, companies are imagining factories of the future that will use AI to improve everything from procurement to demand planning and process engineering.
“Entering 2026, biopharma faces a wide range of business, scientific, technological, policy, and geopolitical pressures,” said John Wu, BCG managing director and partner, leader of biopharma in North America, and coauthor of the report. “Despite these uncertainties, there remains significant opportunity to develop and commercialize innovative treatments that transform patient lives, leveraging advances in underlying biological understanding and modality innovation and AI for greater efficiency. To fully realize the potential of these advances and maintain or establish industry leadership, companies must reimagine their business models across the value chain.”
Download the publication here.
Media Contact:
Eric Gregoire
gregoire.eric@bcg.com