Q3 Health Care Earnings: Pharma Patent Cliffs

Some of the biggest drugs on the market will lose their patent protection in coming years. That includes Merck's Keytruda (2028), a cancer immunotherapy drug, and Bristol-Myers' Opdivo, a Keytruda competitor. Keytruda generated almost $32 billion last year, making it one of the best-selling drugs to go off patent by the end of this decade.

Bristol-Myers will also lose patent protection on Eliquis, a blood thinner it co-markets with Pfizer (PFE) under a profit-sharing agreement. Last year, the drug generated more than $14 billion in revenue and accounted for about 13% of Pfizer's total drug sales. Generic competitors will be permitted to enter the U.S. market in 2028.

Companies have been busy developing and acquiring new products. Pharma companies spent $114 billion on acquisitions in the second quarter of 2026 alone, the most in a quarter since 2019, according to data provider LSEG. So far this year, Merck, AbbVie (ABBV), and GSK (GSK) have announced deals worth at least $5 billion, helping bolster share prices.

The other path to restocking product lineups is drug development, though it's also costly, can take years to generate revenue, and offers no guarantee of success. Underscoring the uncertainty in developing new drugs, Moderna's (MRNA) share price more than doubled in a single day in August when it released results of a cancer vaccine for high-risk melanoma patients, only to drop 18% in one day when the details of the study were released on social media in October.

The big story in pharma—and a major source of profit growth—is GLP-1 anti-obesity and diabetes drugs, which are seeing soaring demand from a so-far mostly untapped market. About 40% of U.S. adults are obese, and nearly one in 10 suffers from severe obesity. So far, the GLP-1 user base in the United States has grown to about 16 million people. That's triple the number in 2022 but only about half the 30 million to 35 million users projected to be using GLP-1s by 2030, according to Boston Consulting Group.

The GLP-1 market is dominated by Eli Lilly (LLY), which sells Mounjaro, Zepbound, and Foundayo, and Novo, which sells Ozempic and Wegovy. Here's what to know as they report earnings.

Investors will be keen to hear the latest sales figures for the pill versions of GLP-1s. Novo introduced its Wegovy pill in the United States in January, while Lilly followed with Foundayo—its once-a-day oral prescription—in April. Both are expected to expand the market to consumers who weren't comfortable with needles, and so far, the majority of people taking the pill versions are new customers, according to Morgan Stanley (MS) analysts.

With its head start, Novo dominated pill sales through the second quarter, capturing more than 80% of the GLP-1 pill market. Although sales of Lilly's Foundayo grew rapidly, they came in below expectations in the second quarter. Lilly said Foundayo is under regulatory review in more than 40 markets, with a rollout across major markets expected in 2027.

In July, Medicare began covering GLP-1s for weight loss under a temporary program that comes with a $50 copay. In addition, many employers are covering the cost for their employees. That includes Bank of America (BAC), which said it's spending about $250 million a year—about 13% of its health care expenditures—on the drugs for its employees.

Meanwhile, regulators have recently approved, or are reviewing, these medicines for additional uses, including reducing risk of heart disease and treating metabolic liver disease and sleep apnea.

While these developments expand the market for GLP-1s, discounts and changes in the payer mix can pressure manufacturers' net prices.

Naturally, other companies are looking to tap into the market for GLP-1s. More than 120 companies are developing anti-obesity drugs, with nearly 200 such medicines already in clinical trials.

Novo's and Lilly's patents for the molecules underlying GLP-1s have already expired in multiple major markets, including India, Canada, and Brazil—all countries where lower-cost generic versions have already been launched. Novo's key patent will expire in Europe in 2031 and the United States in 2032, while Lilly's will expire in the United States in 2036 and in Europe in 2037.

Here are some questions to keep in mind as these drugmakers report:

• Are lower drug prices hurting profits, and is broader insurance/employer coverage, if applicable, bringing in enough new patients to offset lower prices?
• How much revenue will be lost in coming years due to patents expiring, and how much progress is being made in creating new products?
• Are there any changes to guidance regarding profit margins, free cash flow, and spending on acquisitions and research and development?
• Are important tests of new drugs and approval decisions on schedule, or could they face setbacks?

As of October 22, 2026, the health care sector was up 17% year to date, ranking third among the S&P 500^® Index's 11 sectors, behind only energy and information technology. Over the previous three months, health care has continued to rise, gaining about 14%, and now ranks second among all sectors, partly due to defensive rotation. During that same three-month period, biotech gained 21% and pharma gained 11%.

Health care retains a "more favored" rating from Schwab, which cites expected benefits from technological advances and improving operational efficiencies, particularly in groups such as biotechnology. However, company results can vary considerably based on clinical drug trials and regulatory decisions.

For the major health care names reporting in the next week or so, analysts* expect the following:

• Bristol-Myers Squibb: Reporting October 29 before the market open with expected earnings per share (EPS) of $1.28, down from $1.63 a year earlier, on revenue of $12.7 billion, up 3.9% year over year
• Merck: Reporting October 29 before the market open with expected EPS of $2.09, down from $2.58 a year earlier, on revenue of $17.3 billion, up 0.01% year over year
• Eli Lilly: Reporting October 29 before the market open with expected EPS of $7.42, up from $7.02 a year earlier, on revenue of $22.5 billion, up 27.6% year over year
• AbbVie: Reporting October 30 before the market open with expected EPS of $3.75, up from $1.86 a year earlier, on revenue of $17.4 billion, up 10% year over year
• Pfizer: Reporting November 3 before the market open with expected EPS of $0.73, down from $0.87 a year earlier, on revenue of $15.9 billion, down 4.5% year over year
• Amgen (AMGN): Reporting November 3 before the market open with expected EPS of $5.76, up from $5.64 a year earlier, on revenue of $10.1 billion, up 5.2% year over year
• Novo Nordisk: Reporting November 4 before the market open with expected EPS of $0.75, up from $0.70 a year earlier, on revenue of $11.1 billion, down 5.4% year over year
• Moderna: Reporting November 6 before the market open with expected EPS of –$1.27, down from –$0.51 a year earlier, on revenue of $881.5 million, down 12.9% year over year

*Note: Average analyst earnings and revenue estimates are as of October 16, 2026, courtesy of Schwab.com, and are subject to change.