Patent Cliff is a phrase used to describe the sharp drop in revenue a company experiences when patent protection for their product expires.  

The patent cliff phenomenon is particularly acute in the pharmaceutical sector when blockbuster drugs come ‘off patent’ and the loss of income can be measured in billions of dollars, with generic manufacturers free to compete in supply of the medicines.  

The major patent cliff pharma companies have been dreading is looming – threatening to put over $200 billion in annual revenue at risk through 2030. 

Seen as a seismic shift in pharma revenue streams, the impact of patent cliff transitions is a recurring challenge and an industry concern. Generic and biosimilar competitors enter the market and seize the opportunity when blockbuster drugs are losing patent protection, leaving major pharmaceutical companies scrambling to offset revenue losses.

As the post 2025 patent cliff pharma markets are wary of getting ever closer, understanding its impact and the strategies employed to mitigate risks is crucial for industry stakeholders.

What is the 2025 Patent Cliff Pharma Companies Must Prepare For?

A patent cliff occurs when the exclusive rights to a drug expire, enabling other manufacturers to produce and sell cheaper versions of the same medicine. 

Historically, small-molecule drugs faced an immediate decline in sales upon patent expiration. However, with the rise of biologic drugs, the impact is evolving, as biosimilars are not always directly interchangeable with the original drugs.

Which Pharma Giants Are Bracing for the Impact of Patent Cliff Changes

Unlike the early 2010s patent cliff, which saw chemical-based drugs quickly replaced by low-cost generics, this new wave primarily affects biologic drugs – complex medicines derived from living cells. 

  • Humira (AbbVie) – Anti-inflammatory drug (2022 U.S. sales: $18.6B)

  • Keytruda (Merck & Co.) – Cancer treatment

  • Opdivo (Bristol Myers Squibb) – Immunotherapy

  • Stelara (Johnson & Johnson) – Immune disease treatment

  • Eylea (Regeneron) – Eye treatment

These drugs will face competition from biosimilars, which, unlike generics, are not always interchangeable and often have complex manufacturing challenges. This could lead to a slower revenue decline compared to small-molecule drugs, meaning preparedness is key to preserving growth and success.

Financial Considerations: The High-Stakes Impact of the Patent Cliff

The financial ramifications of the looming patent cliff are substantial, with over $200 billion in annual revenue at risk between now and 2030. In fact, major pharmaceutical giants like AbbVie, Merck, and Bristol Myers Squibb, are bracing for substantial financial impacts. 

As key patents expire, these pharmaceutical companies face intense pressure to offset losses, as historical trends show that a blockbuster drug can lose up to 80% of its revenue within the first year of facing generic or biosimilar competition.

Even AbbVie’s Humira, one of the most profitable drugs in history, is at risk. After generating over $18 billion in U.S. sales in 2022, the impact of patent cliff changes have led revenue projections to highlight an incoming steady decline. 

Strategic Responses by Pharma Companies

While the immediate concerns regarding the impact of patent cliff shifts are understandable, some are in stronger positions than others. 

But, how can the risks of the 2025 patent cliff pharma industries are bracing for be mitigated? 

Stock market performance, R&D investment strategies, and shareholder confidence will all be tested as firms navigate a rapidly shifting competitive landscape. Many companies are already employing defensive strategies…

  • Research & Development (R&D) Investments – Companies focus on accelerating the development of innovative drugs to replace the revenue lost from expiring patents.

  • Mergers & Acquisitions (M&A) – Large pharma firms often acquire biotech companies with promising pipelines to secure new revenue streams.

  • Patent Thickets – Extending market exclusivity through secondary patents and reformulations, such as new delivery methods (e.g., subcutaneous versions of IV drugs).

  • Biosimilar Market Tactics – By negotiating exclusive contracts and rebates, pharma companies attempt to retain market share even after biosimilars enter the scene.

2025 Patent Cliff – Pharma Laws and Government Involvement

Governments worldwide are introducing regulations to balancing innovation incentives with affordability and competition:

Inflation Reduction Act (IRA) – U.S.

The IRA grants Medicare the authority to negotiate drug prices, potentially reducing costs for patients while raising concerns about its impact on pharmaceutical R&D investments.

Regulatory Pathways for Biosimilars

Agencies like the FDA (U.S.) and EMA (Europe) are streamlining approval processes for biosimilars, aiming to boost market competition and increase patient access to affordable alternatives.

Patent Reform & Anti-‘Patent Thicketing’ Efforts

Advocacy groups are pushing for stronger policies against patent thicketing, a practice where companies file multiple patents on small drug modifications to delay generic and biosimilar competition. Reforms seek to prevent unnecessary extensions of market exclusivity.

Longer-Term Impact of the 2025 Patent Cliff

Over time, the pharmaceutical industry is expected to shift away from heavy reliance on blockbuster drugs, moving toward a more diverse and innovation-driven model. 

Companies are increasingly investing in niche therapies, including gene therapies, personalised medicine, and treatments for rare diseases. By targeting specialised patient populations, they can reduce dependency on mass-market drugs while maintaining profitability.

To stay competitive, firms are also optimising their drug development and launch strategies. 

Streamlining R&D processes, accelerating clinical trials, and refining go-to-market strategies will be crucial in ensuring a steady pipeline of new treatments. A fact emphasised by the emerging markets such as India and China who continue to expand their generics and biosimilars industries, intensifying global pricing pressures. 

Protecting Innovation in Medicine and Life Sciences with Bailey Walsh

Preparing for the impact of patent cliff pharma companies are wary of? Handle the change with confidence and protect revenue growth with our highly experienced medical and pharmaceutical patent attorneys. 

At Bailey Walsh & Co. LLP, we specialise in intellectual property rights for the medicine and life sciences sectors, working with healthcare professionals, research institutions, life sciences companies, and medical device manufacturers. 

Our team of specialists provide expert guidance in obtaining, enforcing, and licensing IP rights tailored to your commercial needs.

 

Whether you’re seeking to protect groundbreaking research, secure patents for new treatments, or navigate complex licensing agreements, our dedicated team is here to help.

To discuss how we can support your IP protection strategy, contact Bailey Walsh today.