Will 2025 be the year the pharmaceutical industry finds its feet?

After spending 2024 in recovery mode, the biopharma industry is finally showing signs of growth, climbing back toward its pre-pandemic heights.

Evaluate’s latest analysis forecasts an $82 billion increase in major product revenues in 2025 – the largest annual growth since the onset of the pandemic. The sector has taken time to recover from the subsequent slump, but are there signs that 2025 will be the year pharma finds its feet?

Uncertainty will remain – at least for now

There’s no way around it – there is still a lot of uncertainty in the market. And investors hate uncertainty. 2023 was a low point after the highs of COVID and, although there were cautious hopes for recovery in 2024, they were largely unrealised as deal volume and value disappointed.

Can we expect a sudden resurgence in 2025? Probably not. The JP Morgan Healthcare Conference is seen as an indicator of investment and dealmaking for the year ahead and the conference got off to a good start, with several sizeable deals announced on day one. However, these petered out and sentiment was muted for the remainder of the week. Recovery is still on the cards, but it looks like a continuation of the baby steps in 2024 is the likely trajectory.

Then, there is the uncertainty of a new administration in the US. President Trump has sparked concerns among healthcare investors, despite speculation that a less aggressive Federal Trade Commission (FTC) could foster a more favourable M&A environment. Trump's unconventional nominations to lead key US health agencies have intensified anxiety, raising questions about future regulatory priorities. On the bright side, the election is over and, once the administration is established, investor anxiety may settle.

Economic conditions such as relatively high interest rates add another layer of complexity, though. While some market participants are optimistic about improved conditions in 2025, the subdued performance of key biotech indices in 2024 and at the start of 2025 underscore ongoing caution in financial markets.

All of which sounds rather bleak, so let’s investigate the more positive areas of what is still a huge – and growing – sector.

Obesity drugs drive growth

Let’s start with the biggest success story of the year, and probably decade. The words Ozempic and Mounjaro were ubiquitous in 2024 and the year ahead will see more of the same with the continued dominance of the GLP-1 class. These drugs have proven to be some of the most impactful mechanisms ever discovered, both for patients and markets. Novo Nordisk’s semaglutide – marketed as Ozempic for type 2 diabetes and Wegovy for obesity – and Eli Lilly’s tirzepatide, sold as Mounjaro and Zepbound, are expected to generate over $70 billion in combined sales in 2025, according to Evaluate’s forecasts. The commercial success of these therapies has fuelled a surge of interest in dealmaking, with more companies eager to stake their claims in the incretin space.

Market leaders Novo Nordisk and Lilly are in enviable positions, but challenges remain for them in 2025 as they strive to meet demand for these drugs, while maintaining investor confidence. The growth potential in this field remains immense, and the race to develop an oral weight-loss drug continues to build excitement among investors.

Hard as it may be to discern from the news, however, there is more to life in pharma than GLP-1s. According to analysis from Evaluate, while four of the top 10 drugs by revenue will be from this class, the top spot will be retained by Merck & Co’s oncology giant Keytruda. Several other notable inclusions in the list are those that have approvals in multiple disorders, giving them large markets. Examples here are Sanofi/Regeneron’s Dupixent, which is indicated in six settings, and AbbVie’s Skyrizi.

Waiting in the wings

The list of fastest-growing drugs in 2025 is dominated by the incretin-based therapies, but there are plenty of newly-approved drugs and potential approvals across other therapy areas, particularly oncology and immunology. Daiichi Sankyo and AstraZeneca’s antibody-drug conjugate (ADC) Enhertu is forecast to be one of the fastest-growing drugs by revenue this year. ADCs have been a hot area for dealmaking for the past couple of years, and many eyes will be on the partners’ second ADC, which is scheduled to go before US and EU regulators in the first quarter of the year.

Other big potential launches this year include therapies for cystic fibrosis (Vertex), multiple sclerosis (Sanofi), and severe asthma (GSK).Many of the advancements in 2025’s pipeline reflect a broader shift toward precision medicine and combination therapies designed to improve patient outcomes. In addition, partnerships and licensing deals will likely continue to play a critical role in accelerating innovation and pipeline expansion.

All eyes on China

China’s growing influence on pharmaceutical research and development represents a significant wildcard for the industry in 2025. The country’s clinical trial landscape continues to expand, with Chinese companies involved in at least a fifth of global drug development programmes, according to Evaluate's analysis. This trend has been mirrored in high-profile licensing deals, such as Merck & Co’s agreement with LaNova Medicines for LM-299, an investigational anti-PD-1/VEGF bispecific antibody, valued at up to $3.3 billion. The simple truth is that China offers excellent innovation and science at reasonable prices, so we’ll certainly see more western companies heading east to fill their pipelines. What that means for US biotechs is a question for another day.

However, the role of China in biopharma’s future is not without caveats. The Trump administration’s protectionist stance and the potential passage of the Biosecure Act, which seeks to limit partnerships with China-based life sciences companies, pose significant risks to research collaborations and supply chains. Any disruption in these partnerships could hit change in this new dynamic, in which China is seen as an opportunity, rather than a threat.

A pivotal year ahead

While 2025 isn’t going to see a sudden skyrocketing of M&A and investment, it does look promising. There is plenty of investment firepower available and big pharma companies have revenue holes to fill as some blockbusters succumb to loss of exclusivity. These large players are particularly on the hunt for the elusive “pipeline-in-a-product” assets that currently serve AbbVie, Sanofi, and Regeneron so well.

As some – but by no means all – of the uncertainty fades, investor confidence may return and along with it, a loosening of the purse strings. Meanwhile, there is no shortage of great science and innovation for the investors who are prepared to take the plunge.