The Patent Cliff is an industry term describing a period of intense revenue vulnerability experienced by large pharmaceutical companies when the intellectual property (IP) protection expires for multiple, high-grossing, “blockbuster” drug products. The current period, spanning from the mid-2020s through 2030, is projected to be one of the largest patent cliffs in history, with hundreds of billions of dollars in annual revenue at risk as numerous best-selling therapies lose their market exclusivity. This event immediately opens the door to generic and biosimilar competition, which drastically drives down prices and market share for the original drug manufacturer.
This financial pressure is the single largest economic driver behind the current wave of industry transformation. To survive and maintain growth, pharmaceutical companies are being forced to aggressively pursue innovation through Mergers & Acquisitions (M&A)of promising biotech firms, heavily invest in next-generation modalities (like cell and gene therapies), and strategically pivot toward using AI and digital tools to accelerate R&D productivity and fill their pipelines with new, proprietary therapies before the revenue losses become unmanageable.
