Goldman Sachs Analyst Predicts Biotech Recovery into 2026

Biotech Sector Outlook

• 💡 Despite a challenging start to the year and pressure from the administration, the biotech sector has experienced a rebound.
• 🎯 Goldman Sachs analyst Salveen Richter anticipates this recovery to continue into 2026.

Impact of Drug Pricing Deals

• 🤝 Deals struck with the administration to bring drug prices in line globally have removed an overhang of uncertainty for the group.
• 📈 In some cases, aligning US prices with global prices presents an added upside for revenue potential.
• ⚠️ While some regulatory aspects, particularly concerning vaccines, remain uncertain, these have been somewhat appreciated in stock prices.

Key Growth Drivers for 2026

• 🚀 The biotech sector is benefiting from a trifecta of positive factors: stabilization and potential upside in earnings revisions after three years of declines, certainty around business models due to drug pricing agreements, and a rotation away from the dominant AI trade.
• 🧩 A second derivative trade in M&A is expected to play out broadly across the group.
• 🎯 Cancer is identified as a key focus area for the coming year.

Investment Picks and Themes

• 📊 On the large-cap side, Amgen and Regeneron are expected to show upside in numbers, while Biogen is noted as a laggard.
• 🔬 On the small-to-mid-cap side, innovation trades are being watched.
• 💡 Major themes for 2026 include the evolution of cardiovascular disease, the obesity trade, and advancements in oncology and M&A.