Pharma outlook lifted by pipelines and M&A

Pharmaceutical stocks are gaining attention as companies advance drug pipelines, manage patent expirations and pursue acquisitions to support future growth.

BNN Bloomberg spoke with Evan Seigerman, managing director and head of healthcare research at BMO, about how select drugmakers are positioning through clinical progress, niche therapies and strategic deal-making.

Key Takeaways

• Drugmakers are managing patent expirations through acquisitions and pipeline development aimed at stabilizing revenue.
• Clinical trial progress, including strong enrolment and advancing late-stage studies, is boosting confidence in new therapies.
• Rare disease treatments remain attractive due to strong pricing power, targeted patient populations and commercial potential.
• Not all companies are competing in obesity drugs, with some focusing on differentiated therapeutic areas like oncology and immunology.
• Investor sentiment is driven by upcoming clinical catalysts and data readouts that could shift competitive positioning.

Read the full transcript below:

ANDREW: On Hot Picks, today we are zeroing in on the pharmaceutical sector. Our guest has Merck as his top idea. Let’s get more from Evan Seigerman, managing director and head of healthcare research at BMO. Evan, thanks very much for joining us.

EVAN: Thank you for having me.

ANDREW: Merck, of course, has this overhang. It’s going to lose exclusivity on Keytruda, the lucrative drug. Is that weighing on investors’ minds?

EVAN: It is, but they’re doing a very good job addressing that. Let’s talk through why we like this name. First of all, it’s not going to fall off a cliff. It’s more of a gradual glide path down. Management has done an excellent job dealing with that. They’ve made acquisitions and presented some really interesting data at the American College of Cardiology meeting this weekend in New Orleans. They’re putting together a constellation of assets to help not necessarily grow rapidly through that loss of exclusivity, but definitely stabilize earnings and revenue.

We like the recent proposed acquisition of Terns Pharmaceuticals. That was a strong deal at about $6 billion and could become a multibillion-dollar asset in the early 2030s. Overall, while pharmaceuticals always face these loss-of-exclusivity cycles, we like what management is doing to address the issue.

ANDREW: And what did they get with that Terns acquisition?

EVAN: They get a drug for a rare type of leukemia. We saw some very good data at the hematology meeting back in December. It could potentially move into earlier lines of treatment. It’s competitive in the space, it’s a small molecule, easy to administer and has shown strong efficacy.

ANDREW: Can you remind us, has Merck made progress in the area of obesity or weight-loss drugs?

EVAN: They’re actually not focused on obesity or weight-loss drugs, and that’s part of the appeal. While we do like Eli Lilly — we’ve talked about it a lot — it’s important to have exposure to pharmaceutical companies that aren’t tied to obesity. Lilly and Novo Nordisk are likely to remain leaders there, and it’s difficult for new entrants to compete. Merck does have cardiovascular assets, but nothing specifically tied to obesity.

ANDREW: Your next idea is Disc Medicine. The symbol is IRON. Remind us what they do.

EVAN: They’re a smaller biotech name. They received a priority review voucher for their lead drug, bitopertin, but it was unexpectedly rejected. That said, they have phase 3 data coming later this year. They recently announced over-enrolment in the trial, which we see as a positive.

We think the drug could reach the market next year and beyond. They also have therapies for other rare blood conditions like polycythemia vera and myelofibrosis. Overall, in the small biotech space, these niche companies can add multibillion-dollar value to larger pharma portfolios, making them potential acquisition targets.

ANDREW: And people were keen to enrol in that trial?

EVAN: The trial is now fully enrolled. It’s for a rare disease called erythropoietic protoporphyria. Patients have severe reactions to sunlight due to a toxic metabolite in the blood. This drug helps address that. It’s an easy-to-take pill and has shown strong efficacy and safety.

Because it’s a rare disease, the patient population is small, but that supports strong pricing potential, making it commercially attractive.

ANDREW: And Regeneron — they’re active in the GLP-1 space as well — but remind us what their drug is doing.

EVAN: That’s not the main reason we like the name. We like it because of a growing oncology business with a key catalyst in the first half of this year. It’s a drug for metastatic melanoma, and we believe it could outperform the current standard of care.

They do have exposure to obesity through a GLP-1/GIP asset licensed from China, and they’re also exploring muscle preservation in weight loss. But beyond that, they have strong positions in immunology and ophthalmology, which are key drivers.

And of course, we can’t ignore Dupixent, their blockbuster product partnered with Sanofi.

ANDREW: Thanks very much, Evan. Always great to get your insights.

EVAN: My pleasure.

ANDREW: Evan Seigerman, managing director and head of healthcare research at BMO.

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This BNN Bloomberg summary and transcript of the March 30, 2026 interview with Evan Seigerman are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.