Generic Drug Industry Transformation: Biosimilars and Complex Generics Drive New Growth for Sandoz, Teva, and Viatris
核心洞察
The generic drug industry is shifting from traditional small-molecule generics toward biosimilars, complex generics, and specialty injectables as price erosion pressures margins on commodity generics.
Sandoz reported Q1 2026 net sales of $2.76 billion with biosimilars growing 18% year-over-year, now accounting for nearly one-third of total revenues.
Teva, the world's largest generic drugmaker, expects its biosimilars business to generate $800 million in revenues by 2027, supported by its strategic partnership with Alvotech.
The generic pharmaceutical industry is undergoing a fundamental transformation as manufacturers pivot away from traditional commodity generics toward higher-value, differentiated products. Intense competition and persistent price erosion in conventional small-molecule generics have compressed margins, compelling drugmakers to invest in biosimilars, complex generics, and specialty injectables—categories that offer stronger margin potential and more durable competitive positions.
The Zacks Medical – Generic Drugs industry, a 12-stock group, currently carries a Zacks Industry Rank of #174, placing it in the bottom 29% of 246 Zacks industries. Despite this gloomy ranking, the industry has surged approximately 44% over the past year, dramatically outperforming the broader Zacks Medical sector's nearly 1% growth and the S&P 500's rise of over 29%. Based on forward 12-month price-to-earnings (P/E F12M), the industry is trading at 15X, compared with the S&P 500's 21.99X and the Zacks Medical sector's 19.49X.
Three Trends Reshaping the Generic Drug Landscape
The loss of patent exclusivity on blockbuster biologic drugs is creating substantial new opportunities. Recent high-profile biosimilar launches include versions of Johnson & Johnson's Stelara, Amgen's Prolia/Xgeva, and Regeneron's Eylea. Drugmakers are also advancing biosimilar candidates for Merck (搜索)'s blockbuster oncology drug Keytruda, which is expected to lose patent protection in 2028.
Simultaneously, competition remains intense across the generic drug market. Once a branded drug loses exclusivity, multiple manufacturers often enter, leading to price competition and margin pressure. Companies seek first-to-file status to gain periods of exclusivity, but the market remains crowded with numerous filings pending before the FDA.
In response, manufacturers are emphasizing operational efficiency and portfolio optimization—streamlining product portfolios, discontinuing lower-return programs, and investing in manufacturing productivity and supply-chain optimization to protect profitability.
Sandoz: Biosimilars Powering Growth
Sandoz, the Swiss-based generic drugmaker spun off from Novartis in 2023, achieved net sales of $2.76 billion during the first quarter of 2026, up 3% year over year excluding foreign exchange effects. Growth was primarily driven by its biosimilars business, which grew 18%, led by strong demand for Afqlir (biosimilar to Eylea), Pyzchiva (biosimilar to Stelara), Jubbonti (biosimilar to Amgen's Prolia), and Wyost (biosimilar to Amgen's Xgeva).
Biosimilars now account for nearly one-third of Sandoz's total revenues and remain the company's primary growth driver. Sandoz expects 2026 sales to grow at a mid- to high-single-digit rate, supported by recent product launches and continued expansion of its biosimilars portfolio.
In March, the company expanded its partnership with Samsung Bioepis (搜索) to develop up to five biosimilars, including a biosimilar version of Takeda (搜索)'s Entyvio (vedolizumab). The agreement further strengthens what management describes as an industry-leading biosimilars pipeline. The stock has surged 51% in the past year, and the consensus estimate for 2026 EPS has increased from $4.11 to $4.13 in the past 30 days. Sandoz carries a Zacks Rank #2 (Buy).
Teva: Diversification Through Branded Medicines and Biosimilars
Teva Pharmaceuticals, the Israel-based company that is the world's largest generic drug company by both total and new prescriptions, commands a share of more than 6% in the United States, the world's largest generic market. The company regularly pursues first-to-file and first-to-market opportunities and seeks approval for complex generics likely to face less competition.
Teva has a growing biosimilars pipeline developed in partnership with Alvotech, including Simlandi and Selarsdi—the first two biosimilars launched in the United States under the strategic partnership, which encompasses seven biosimilar candidates. The company expects its biosimilars business to generate $800 million in revenues by 2027.
The company is also benefiting from continued growth in its branded medicines portfolio, which includes Austedo, Ajovy, and Uzedy. These products support Teva's ongoing transformation into a more diversified biopharmaceutical company. The stock has surged nearly 100% in the past year, though the consensus estimate for 2026 EPS has declined from $2.50 to $2.39 in the past 30 days. Teva currently carries a Zacks Rank #3 (Hold).
Viatris: Complex Generics and Branded Portfolio Strength
Viatris offers a broad mix of generics, including oral solids, injectables, and topicals. The company's generic business delivered strong performance in North America during the first quarter of 2026, supported by increased demand for estradiol, continued momentum from Breyna (generic version of Symbicort), and contributions from recently launched complex generic products.
Viatris also benefited from new product launches such as iron sucrose and octreotide, and expects additional growth from the planned U.S. launch of generic Abilify Maintena later this year. The company's branded business, which comprises two-thirds of its portfolio, also performed well, with key products such as Creon and Amitiza continuing to support revenue growth.
The stock has surged 88% in the past year, and the consensus estimate for 2026 EPS has increased from $2.44 to $2.47 in the past 30 days. Viatris carries a Zacks Rank #3 (Hold).