Barclays has shifted to a more cautious stance on European pharmaceuticals, biotechnology and life sciences heading into 2027, maintaining a Neutral sector rating after previously holding a positive bias, according to lead analyst James Gordon.
The bank estimates peak pipeline readout potential for the sector at roughly $50 billion in 2027, down from approximately $75 billion in 2026. Top-line growth is forecast at 7% in local currency next year, compared with 8% in 2026. Large-cap forward price-to-earnings ratios remain at 15 times, which Barclays said shows the sector is "not establishing a market premium." Life sciences is expected to outperform on a relative basis, with growth roughly 2 percentage points faster in 2027 than in 2026.
Patent expiry risk remains a factor further down the line, with around $70 billion in losses expected in 2031 and another $50 billion in 2032.
Within its 28-stock coverage universe, Barclays favors biotech, mid-cap and specialty names over large caps. On large caps, the bank is Overweight AstraZeneca, pointing to 2027 pipeline optionality and re-rating potential, and Roche, citing long-duration growth and its breast cancer launch. GSK is rated Underweight, with Barclays noting the new CEO's re-rating is largely complete, a quiet 2027 ahead and proximity to HIV loss-of-exclusivity.
In biotech, Barclays is Overweight Genmab and Argenx, citing strong oncology pipeline risk-reward and the fastest growth in the sector, respectively. Lakefront is Underweight due to limited disclosure, a thin pipeline and a weak M&A track record.
Mid-cap and specialty picks include Overweight ratings on Bayer, Galderma and Grifols. Ipsen is Underweight given generic-competition risks and margin pressure. In life sciences, Lonza, Sartorius and Sartorius Stedim Biotech are rated Overweight, while Diasorin is Underweight on execution risk and limited visibility.
In specific rating changes, Hikma Pharmaceuticals was upgraded to Equal Weight from Underweight, while Ipsen was downgraded to Underweight from Equal Weight. Zealand Pharma was cut to Equal Weight from Overweight. Genmab and Lundbeck received positive Catalyst Alert reports ahead of the fourth quarter. Hikma rose 1.4% in European trading by 10:31 GMT; Ipsen tumbled more than 4%.
The full sector note covers 28 stocks across European pharma, biotech and life sciences.
