Analysts from William Blair forecast a more promising year for the biopharmaceutical sector in 2026, following a difficult period. The industry’s leading stocks have rebounded significantly, with the SPDR S&P Biotech exchange-traded fund climbing from $66.66 per share on April 9 to $123.43 by December 19, marking an 85% increase. This recovery, combined with favorable developments under President Donald Trump’s administration, is contributing to a renewed sense of optimism.
The analysts highlighted that policies aimed at reshoring biopharma manufacturing in the United States and instituting most favored nation (MFN) pricing have provided a buffer against anticipated tariffs. Despite ongoing uncertainties surrounding U.S. drug pricing and potential challenges from international markets, especially China, they believe that robust clinical data and strategic mergers and acquisitions will sustain better performance than seen in the bear markets of recent years.
According to William Blair analysts, including Dr. Matt Phipps and Dr. Sami Corwin, as long as the sector continues to reward strong clinical outcomes and reduces regulatory barriers, investments in biotech are likely to yield strong returns. Below are seven key trends expected to shape the biopharma landscape in 2026, as derived from interviews with industry experts and surveys.
AI Integration: Transforming Operations and Trials
Artificial intelligence (AI) is poised to play a pivotal role in transforming the biopharma landscape. A Deloitte survey indicated that 78% of 180 surveyed biopharma executives expect AI to drive significant changes, with nearly a third planning to implement AI tools to enhance workforce productivity. Yet, only 22% of leaders in the broader life sciences sector reported success in scaling AI applications.
Roel van den Akker from PwC emphasized the industry’s shift from theoretical use cases to tangible results in clinical development and commercial functions. “We need to demonstrate what AI can achieve in clinical trials and operational efficiency,” he stated.
One notable application of AI is its use in managing clinical trials. Recursion, an AI-driven drug developer, has initiated a “ClinTech” strategy to improve trial design, speed up enrollment, and enhance evidence generation. CEO Najat Khan expressed ambitions to transition from potential to proven applications in drug development.
Another AI-focused firm, Insilico Medicine, is set to launch its initial public offering (IPO) on the Hong Kong Stock Exchange, aiming to raise approximately $260.5 million to fund drug research and development. The company plans to advance its 40-program pipeline, including a Phase IIb/III study for a treatment targeting idiopathic pulmonary fibrosis.
Biomanufacturing: A Commitment to Domestic Growth
In a significant shift, U.S.-based and international biopharma companies are committing over $480 billion to domestic manufacturing and research and development projects. This trend aligns with President Trump’s call to reshore operations to circumvent tariffs on imported pharmaceuticals. A large portion of this investment is attributed to Pfizer and Merck & Co., each pledging $70 billion.
Pfizer’s recent commitments were made public during a press conference in September, where CEO Albert Bourla agreed to adopt MFN pricing for drugs sold to Medicaid patients. Merck is establishing a $3 billion Center of Excellence for Pharmaceutical Manufacturing in Virginia, projected to create more than 500 permanent jobs.
States such as Virginia and Alabama are experiencing a biomanufacturing boom, with AstraZeneca and Eli Lilly announcing substantial investments in new facilities. The shift to local production is seen as critical for both economic growth and national security.
Cancer Research: New Therapies and Vaccine Trials
Cancer drug development remains a cornerstone of biopharma, with several key advancements expected in 2026. Pfizer is set to initiate Phase III trials for a next-generation bispecific antibody, PF-08634404, targeting cancers such as non-small cell lung cancer and colorectal cancer. This therapy aims to establish itself as a new backbone in cancer treatment, potentially reducing reliance on traditional chemotherapy.
In parallel, Moderna and Merck are making strides in cancer vaccine development. Moderna has completed enrollment for a Phase III trial assessing an mRNA-based vaccine in combination with Keytruda, with efficacy results anticipated in 2026.
The competitive landscape also includes BioNTech, which has presented promising data for its mRNA cancer immunotherapy vaccine candidate. These advancements signify a robust pipeline in oncology, with multiple trials underway to explore new treatment avenues.
Financial Outlook: M&A Activity and IPO Growth
Market analysts are projecting an acceleration in mergers and acquisitions (M&A) activity in 2026, building on a recovery seen in 2025. The total deal value surged to $179.6 billion, despite a decline in the number of transactions. Major deals, including Johnson & Johnson’s acquisition of Intra-Cellular Therapies and Novartis’ purchase of Avidity Biosciences, highlight the trend toward consolidating assets to fortify drug pipelines.
Additionally, venture capital investment in biotech is expected to rebound, with funding potentially revitalizing the sluggish IPO market. The anticipation of increased M&A and VC financing could lead to a more favorable environment for new public offerings.
Genetic Medicines: Personalized Therapies on the Rise
The development of personalized genetic therapies is set to gain momentum, following the groundbreaking treatment of KJ Muldoon, who became the first patient treated with a personalized CRISPR therapy. This pioneering approach underscores the potential for individualized treatments to address rare genetic disorders.
The FDA’s recent establishment of a new pathway for approving “N-of-1” therapies aims to streamline access to such innovative treatments, particularly for ultra-rare conditions. This commitment is expected to facilitate the rapid deployment of gene-editing technologies in clinical settings.
Regulatory Landscape: Anticipating Stability
Following a tumultuous year marked by significant regulatory changes, industry observers predict a more stable environment in 2026. The FDA, under the leadership of Commissioner Martin A. Makary, is expected to enhance its efficiency in reviewing drug applications while fostering collaboration with the biopharma industry.
As the sector adapts to new regulatory frameworks, stakeholders remain optimistic about the prospects for innovation and growth in the coming year.
In summary, 2026 is shaping up to be a pivotal year for the biopharma industry, characterized by technological advancements, substantial investments, and a renewed focus on personalized medicine and regulatory efficiency.
