Nine of the world’s 25 largest drugmakers grew revenue by double digits in the second quarter of 2026. Only one — Teva — declined, and even that was by less than 1%. By any headline measure, Big Pharma just posted a blowout quarter. Yet beneath the surface, a very different story is unfolding, one that industry insiders Fraser Kansteiner and James Waldron spent an entire episode of The Top Line unpacking: the industry is standing on a plateau, and the strategic moves visible this quarter are all attempts to build the next revenue base before the current one erodes.
The forces at play are familiar — patent cliffs, IRA pricing concessions, and a second Trump administration’s most-favored-nation policies. What’s new is how urgently companies are responding. New CEOs at Sanofi and Sarepta are signaling pipeline resets. AI talk has finally given way to specific deployment details. And the obesity war between Novo Nordisk and Eli Lilly has shifted from injectables to a new oral battlefield.
AI moves from hype to specific workflows
For years, “AI in pharma” meant little more than executives name-dropping the technology in earnings calls. This quarter, the conversation shifted decisively. Across Novartis, GSK, AstraZeneca, and Roche, CEOs described concrete applications — and, notably, pushed back on the idea that AI would decimate pharma headcount.
Roche’s CEO Thomas Schinecker offered the most granular framework, breaking AI use into three levels. The first is everyday productivity: the company has trained roughly 100,000 employees, and about 75% of the workforce uses AI tools daily. The second is core process optimization — for example, compressing regulatory filing timelines from months to roughly a week. The third is what Schinecker calls “big ideas”: a lab-in-the-loop approach to accelerate drug discovery and increase the volume of new molecules entering the pipeline.
AstraZeneca’s Pascal Soriot added a distinctive angle that cuts against the industry grain. While most companies focus AI on preclinical molecule selection, Soriot emphasized applying it to Phase 3 trial design — the point of maximum cost, where improving success rates delivers outsized financial returns. He also dismissed AI-driven job losses as “a bit of a fake story,” arguing the technology’s purpose is to make people “faster and smarter,” not replace them.
GSK’s Luke Miels reiterated that the bulk of value comes from proprietary AI interrogating massive biological datasets at the discovery and IND stage. Novartis’s Vas Narasimhan went a step further, naming specific tools — Copilot and Claude — being rolled out company-wide.
CompanyCEOPrimary AI focusNotable detailRocheThomas SchineckerThree-tier: productivity, core processes, disruptive R&DRegulatory filings: months → ~1 weekAstraZenecaPascal SoriotPreclinical + Phase 3 trial designRejects AI job-loss narrativeGSKLuke MielsDiscovery/IND-stage biological data interrogationProprietary tools, not off-the-shelfNovartisVas NarasimhanR&D plus enterprise-wide rolloutNamed Copilot and Claude specifically
Kansteiner added a cautionary note from a separate conversation with Andy Dubler at the Regeneron Genetics Center: AI’s value depends on the quality of underlying genomic libraries. Breadth alone is insufficient — the data must be synthesized and well-understood for AI tools to be effective. It’s a reminder that the technology is only as good as the data feeding it.
The obesity race: oral GLP-1s reset the competitive map
The injectable GLP-1 market remains Eli Lilly’s domain. Mounjaro delivered $9.9 billion in Q2 2026, up 91% year over year, while Zepbound added $4.9 billion, up 46%. But in the oral arena, the dynamic has flipped. Novo Nordisk has seized the initiative.
Novo launched its oral Wegovy — an oral formulation of semaglutide — in the US on January 5, 2026, and holds a substantial lead in sales and prescription numbers over Lilly’s oral Foundeo, which launched in April 2026 and uses a different molecule, not tirzepatide. This reverses the earlier pattern where Lilly overtook Novo in injectables despite Novo’s first-mover advantage.
The oral race is now expanding beyond US borders. Novo is rolling out oral Wegovy in Europe, including the UK and soon Germany, with CFO Karsten Munk Knudsen describing a “sweet spot” pricing strategy for the region. Lilly’s Foundeo generated $31 million in the UAE in Q2, which analysts read as a positive signal for global uptake — though it’s a fraction of what Novo is achieving in Europe.
The competitive picture is further complicated by Novo’s raised full-year guidance — now minus 6% to 0% sales growth, versus a prior range of minus 4% to minus 12%. Knudsen attributed the adjustment partly to generic semaglutide entering markets like Canada and Brazil, where international patents for the active ingredient expired this year.
Knudsen also addressed CagriSema, Novo’s next-generation weight-loss drug awaiting an FDA decision. He remained optimistic despite the drug missing an endpoint in a Phase 3 type 2 diabetes study announced on the same day as earnings — the second clinical disappointment for the candidate. In a candid moment, he acknowledged the pressure of helming a company that rode the obesity boom to unprecedented heights, then fought a bruising market-share battle with Lilly, and now appears to have regained momentum with the oral launch.
Sanofi’s new CEO signals a fundamental R&D reset
Sanofi’s Q2 report was the first under new CEO Belén Garijo, who moved from running Germany’s Merck KGaA with a board mandate to fix a pipeline that has suffered repeated high-profile clinical setbacks. The week before earnings, Sanofi dropped amlitelimab in atopic dermatitis — once touted as a $5 billion opportunity. On earnings day, it scrapped two more clinical-stage products.
Garijo’s language signaled more cuts ahead. “We’re going to look very deeply at our current late-stage portfolio and we will decide on scientific needs, potential to create long-term value, and obviously ensuring the right risk profile of our pipeline moving forward,” she told Waldron directly.
But Garijo declined to commit to a specific number of discontinuations. Waldron’s read: “She just said the company doesn’t — and I quote her — have a target number of products to discontinue. So you can read into that what you like.” The implication is clear — a sweeping portfolio prune is coming, even if Sanofi won’t put a number on it.
The urgency is existential. Sanofi needs a successor to Dupixent, its aging blockbuster co-marketed with Regeneron. Dupixent still delivered 38% year-over-year growth in Q2, reaching €5.2 billion (~$6 billion), buoyed by recent approvals in COPD, chronic spontaneous urticaria, bullous pemphigoid, and allergic fungal rhinosinusitis. But the patent cliff looms, and the pipeline has not produced a credible heir. Garijo’s appointment signals the board’s recognition that incremental fixes are insufficient.
Sarepta’s gene therapy faces a slow recovery
Sarepta’s new CEO Michael Severino, a former AbbVie executive, delivered his first earnings address amid ongoing fallout from Elevidys, the Duchenne muscular dystrophy gene therapy. Safety concerns raised by the FDA, patient deaths linked to the therapy, and a label restriction in non-ambulatory patients have depressed sales: Q2 revenue of $98 million, down 4% sequentially, though 3% ahead of Wall Street expectations.
Severino pointed to increased patient enrollment forms as early evidence that commercial initiatives are gaining traction. But he cautioned that the lag between patient intent and actual infusion means the revenue impact won’t materialize until 2027. The company expects H2 2026 Elevidys sales to be “modestly lower” than H1, reflecting a bolus of patients who signed up after the FDA’s 2024 label expansion.
Two additional pressures loom. Sarepta’s commercial exon-skipping therapies Vyondys 53 and Amondys 45 face an FDA full-approval decision by late February 2027, with no advisory committee currently scheduled. Competitor Dine Therapy has a rival DMD treatment in development. The company is also studying prophylactic sirolimus as part of an enhanced-safety cocktail for Elevidys in non-ambulatory patients.
Emerging blockbusters: BridgeBio and Incyte
Two mid-cap stories illustrate how single products can transform a company’s trajectory. BridgeBio’s Attruby, for transthyretin-mediated amyloidosis, generated $222 million in Q2 — 6% above consensus — leading Jefferies to project it will cross $1 billion in full-year 2026 sales.
The drug’s position strengthened significantly when AstraZeneca and Ionis’s rival Wainua failed a Phase 3 trial in the same indication. Alnylam’s Amvuttra also undershot analyst projections by 4% despite solid year-over-year growth. BridgeBio’s CEO now describes the ATTR market as “stabilizer-first,” positioning Attruby favorably against the remaining competition.
Incyte’s Opzelura, a topical JAK inhibitor for atopic dermatitis and vitiligo, reached $450 million in Q2, up 24% year over year, boosted by a one-time $246 million Medicaid rebate settlement. The CMS reclassified Opzelura so it is no longer treated as a line extension of the oral JAK inhibitor Jakafi for rebate purposes, and Incyte expects an additional $40–50 million benefit for the rest of 2026. The company’s CEO cautioned, however, that the pricing and reimbursement environment remains “dynamic,” and sustained growth depends on expanding access.
Three threads connect these disparate stories. First, the industry’s Q2 financial strength is real but fragile — driven by drugs like Dupixent, Mounjaro, and Zepbound that face patent or competitive erosion within a few years. Second, the strategic responses are converging on efficiency: AI to compress development timelines and improve Phase 3 success rates, oral formulations to expand obesity markets and defend against generics, and aggressive portfolio pruning at Sanofi and Sarepta to concentrate resources on the highest-probability bets. Third, leadership changes are accelerating — Garijo at Sanofi, Severino at Sarepta, and Novo’s C-suite shakeup — all signaling that boards recognize the current model requires recalibration before the cliff arrives.
For investors, the implication is that headline revenue growth alone is a poor guide to the next decade. The companies worth watching are those making difficult, specific decisions now — pruning pipelines without flinching, deploying AI in ways that show up on the income statement, and fighting for oral GLP-1 share before generic erosion accelerates. The open question for the next 12 to 18 months is whether these fixes materialize fast enough to close the revenue gap that patent expiries will open. The answer will determine which of today’s pharma giants are still giants a decade from now.