Newsletter · · Ashutosh Agarwal

Analysts Argue the Keytruda Patent Cliff Is Overstated as GSK and Lilly Keep Buying - The Biotech Patent Cliff & M&A - Week of June 19, 2026

Biotech M&A and patent-cliff newsletter for the week of June 19, 2026. A public-interest IP lawyer argues the Keytruda cliff is really a slope while GSK, Lilly and a fresh run of deals confirm the supercycle is still printing.

The Biotech Patent Cliff & M&A

Week of June 19, 2026: Analysts Argue the Keytruda Patent Cliff Is Overstated as GSK and Lilly Keep Buying

June 19, 2026

Here's the contrarian take that ran through the tape this week: the patent cliff everyone is underwriting may be more of a gentle slope. A public-interest IP lawyer laid out, with receipts, why Keytruda biosimilars won't actually show up when the 2028 patent "expires," and in the same seven days the bankers and a string of fresh deals all said the supercycle is very much alive. The two ideas aren't in tension. They're the same trade.

TL;DR

  • The "patent cliff" framing got openly challenged: I-MAK's Tahir Amin argues Keytruda's 2028 expiry won't bring IV biosimilars until 2033–34, citing Merck CEO Rob Davis's own "patent hills" language, and the Humira playbook (70 patents, +7 years, $114B of extra revenue) as the template.
  • The deal machine kept printing: GSK's $10.6B all-cash Nuvalent buy (its third this year), Lilly's 11th acquisition of the year (~$20B deployed lately).
  • UBS reframed the large-cap call around firepower: Merck's "string of pearls" (>$20–25B of pipeline value, 12x, $140–150 target) vs. Pfizer "fully levered, can't do a lot" post-Seagen.

What's new

The biggest idea this week: the cliff might be a myth. On Citeline's Generics Bulletin, "Probing The Patent Monopoly With I-MAK's Tahir Amin" (June 18), Tahir Amin, co-founder of the Initiative for Medicines, Access and Knowledge, attacked the whole vocabulary: "the language of patent cliffs is a myth... It was the CEO of Merck, Rob Davis, who said... apparently Keytruda, the main molecule is supposed to come off in 2028. We've studied that. We're not going to see a biosimilar IV version... until at least 2033, '34." His template is Humira: "AbbVie got an extra seven years beyond their main molecule patent. And in that seven years, they earned $114 billion in revenue and the price went up twofold. And that's going to happen with Keytruda, too." This is a policy advocate, not a sell-side bull, but the implication for a long book is the same: incumbent franchises bleed slower than the consensus erosion curves assume.

The deals didn't slow, they got named. On Citeline's Scrip's Five Must-Know Things (June 15), the editors walked through GSK's $10.6 billion all-cash buyout of Nuvalent, "GSK's biggest acquisition in years" and its third of 2026 after RAPT ($2.2B) and 35 Pharma ($950M), "a quickening of M&A pace under new CEO Luke Meals." Nuvalent's two lead oncology assets carry FDA Breakthrough designations with decision dates this September and November. Separately, on Motley Fool's Hidden Gems (June 17), Rachel Warren flagged Lilly's 11th acquisition this year (4E Therapeutics): "they've spent almost $20 billion acquiring businesses over the last few years," funded by the GLP-1 cash gusher.

Merck has the firepower; Pfizer doesn't. On CNBC's Fast Money, "Looking Ahead to the Biotech IPO Boom" (June 18), UBS biotech head Michael Yee drew the sell-side line: "Pfizer did a tremendously big deal at $40 billion. Basically, it's fully levered. Can't do a lot. You take a look at Merck. They've basically been doing a string of pearls... five, six deals, less than $10 billion, mostly de-risked... they've got $20, $25 billion [of pipeline value]... That's going to replace most of that Keytruda patent cliff. Stock is cheap. Trades at 12 times... about $140, $150." His historical comfort: "AbbVie and even Amgen... had patent cliffs, they grow through it." He pegs Merck's own cliff at "$25, $35 billion."

J&J says it's not married to its AAA rating. On Washington Welcomes, Joaquin Duato, Chairman and CEO of J&J (June 17), the CEO (an operator) kept the door open on a large deal while signaling discipline: "We always aim to have a happy mix of 50-50, internal and external [innovation]... We are not married to the AAA credit rating. If a good opportunity would come along, we would be happy not to have a AAA credit rating." No targets named, read it as capacity held in reserve, not imminent action.

The debate

This week was less one-sided than last. The supercycle bull case is still doing the heavy lifting, named multi-billion deals, a banker quantifying Merck's deployable pipeline value, IPO windows wide open. But a genuine skeptic's case finally got voiced. On Value Hive, "Peter Mantas: The Biotech Bubble Whisperer" (June 19), Mantas argued the cycle is real but late-ish: "The IPOs you're seeing today... are real companies. The moment you start seeing science projects, it's more like okay, the easy money's been made." He also flagged a non-fundamental risk: an FDA credibility overhang under new CBER leadership, which he says knocked uniQure from ~$70 to ~$27 on a surprise Phase 3 requirement, "a credibility problem" and a political risk, not a scientific one.

And the "patent hills" thesis cuts both ways: bullish for incumbent cash flows, but bearish for the biosimilar makers counting on clean 2028 entry. What's still absent from the tape: any FTC domestic merger-challenge commentary, and any voice warning that strategics are overpaying for the bolt-ons.

The names in play

  • MRK, the cleanest operator-and-sell-side narrative: string-of-pearls firepower, >$20–25B pipeline value to backfill a "$25–35B" Keytruda cliff, 12x with a $140–150 target. The "patent hills" reframe (biosimilars maybe not until 2033–34) is incremental upside to the bear erosion case.
  • PFE, boxed in. "Fully levered, can't do a lot" post-Seagen per UBS. A buyer with a stretched balance sheet.
  • LLY, the most aggressive deployer; 11 deals YTD, ~$20B, using GLP-1 cash to diversify while it carries no near-term cliff of its own.
  • GSK, re-rating its oncology ambition with the $10.6B Nuvalent deal; two Breakthrough assets with 2026 FDA dates.
  • JNJ, capacity in reserve; Duato willing to spend the AAA rating for the right asset but signaling no urgency.
  • APGE / Cogent, UBS's named sub-$2B takeout candidates (Apogee's Phase 3 atopic derm; Cogent on file with two drugs), plus a third Phase 3 rare-disease/obesity name (NBX) Yee flagged as "getting a lot of attention."

Read-throughs

  • Biosimilar makers face a new squeeze. On Of Significance, "Biosimilars are Changing Antitrust" (June 17), antitrust economist Katia Twal explained why biologic erosion is structurally gradual (only ~25 of ~90 biosimilars carry interchangeability; substitution is state-law governed), and flagged the real new threat: PBM private labels. "The big three PBMs, CVS Caremark, Optum, and Express Scripts, all three of them have their own private labels now." The next phase of competition "depend[s] far less on FDA approvals and more on payer incentives." Headwind for independent biosimilar economics; structural support for incumbent biologic franchises.
  • XBI / IPO window. Yee called the resurgence "multi-year," with the host noting XBI up ~70% over twelve months; CNBC's Angelica Peebles tallied 13 biotech IPOs YTD for ~$5B, "a post-pandemic high, according to DealLogic," with appetite skewed to "mid to late stage" assets.
  • CROs. On BioCentury This Week, "Biotech IPOs, Biosecure Act, cachexia pipeline" (June 16), the DoD added WuXi AppTec to its 1260H Chinese-military list, auto-triggering "biotech company of concern" status under the Biosecure Act; WuXi has sued. If it sticks, Western CROs/CDMOs (Lonza, Charles River, Thermo Fisher/Patheon) inherit the displaced work.
  • Policy backdrop is less scary than the headlines. On Pathfinders' MFN episode (June 13), RBC/Capstone analysts argued the Most-Favored-Nation fight is "heading for court, not legislature," and the nominal Part D exposure is "around 2% of Part D spend," though the 100% pharma tariffs slated for end-July are the administration's lever to push more voluntary pricing deals.

What changed

Last week the story was the volume, a banker telling us billion-dollar life-sciences deals had tripled. This week the supercycle got specific names attached (GSK/Nuvalent, Lilly's 11th) and, more interestingly, picked up its first real counter-narrative: the patent cliff itself may be overstated, and a credible investor is now whispering "bubble." The signal moved from "supercycle confirmed" to "supercycle running, but now there's a thesis on why the cliffs everyone fears may not bite, and the first voice asking whether the easy money's been made."