
Written by: Keegan Caldwell, PhD
The pharmaceutical industry will spend the next five years hurtling toward 2030’s multibillion-dollar patent cliff, when patents for blockbuster drugs including Eliquis[1], Keytruda, and Stelara[2] will expire or have recently done so. To put this in perspective, these three medications alone collectively generate an excess of $48.06 billion in global sales.[3, 4, 5] And if we extend this timeline by just three years and include all drugs positioned to reach this cliff, like Jardiance and Opdivo, the pharmaceutical industry as a whole is bracing to lose up to $400 billion.[6]
This looming cliff serves as a stark reminder of just how important strategic patent management truly is. While patent cliffs are often associated with pharmaceuticals, they pose similar challenges across any rapidly developing sector and highlight a fundamental issue facing all innovation-driven companies: How do you maintain market position and revenue when crucial intellectual property (IP) protection expires?
The stakes are particularly high in today’s market, where the asset mix owned by companies is decidedly intangible. Assets like IP comprise roughly 90% of the value of companies in the S&P 500.[7] So, as companies face increasing pressure to innovate while protecting their market share, the ability to maintain innovation momentum and market value beyond patent expiration has become a critical component of long-term success.
Understanding Patent Cliffs
An organization reaches a patent cliff when its IP protection expires, opening the door to increased competition. The term “cliff” rather aptly describes the steep drop in revenue that often follows a crucial patent’s expiration. In the pharmaceutical industry, the expiration of a patent usually means biosimilars can enter the marketplace, often referred to as “generics.”
Several key factors contribute to the severity of revenue loss following patent expiration:
Market Competition Dynamics
The speed and intensity of revenue decline often correlate directly with the number of competitors entering the market. In pharmaceutical markets, for instance, the entry of generics often results in a market share reduction of 80% or more for the branded drug within the first year.[8] In technology sectors, where barriers to entry extend in some capacity beyond patent protection, the decline may be more gradual but still significant.
Product Complexity
Complex products and technologies often face different patent cliff dynamics than simpler ones. This complexity can work both ways: while it might delay competitor entry due to manufacturing or implementation challenges, it can also create multiple points of vulnerability as various components lose protection.
Geographic Market Variations
Patent cliffs increasingly have a global dimension, with protection expiring at different times across jurisdictions. For instance, in 2018 when AbbVie’s immunosuppressive drug Humira lost exclusivity rights in the EU, generic competition hit the market priced as much as 40% lower—and captured around 35% of Humira’s EU market share in two years.[9] However, though AbbVie’s principal US patent had expired two years prior in 2016, AbbVie leveraged the US’s specific legal landscape to develop a patent thicket of 166 granted patents, ultimately extending Humira’s exclusivity in the US for seven more years.[10]
Industry-Specific Factors
The impact of patent cliffs varies significantly by industry. While pharmaceutical companies might see revenue drops within months of patent expiration, technology companies often face a complex situation where network effects, brand loyalty, and continuous innovation can help maintain market position even after key patents expire.
Strategic Approaches to Patent Cliff Management
When Humira lost patent protection in 2023, it marked one of the most significant patent expirations in pharmaceutical history: the end of a twenty-year monopoly that generated over $200 billion in total revenue.[11] Humira generated $583 per second in 2020—four years after its principal patent protection was originally set to end—and AbbVie’s seven-year, multi-faceted efforts to delay Humira’s patent expiration resulted in Humira earning AbbVie an additional $68 billion in the US market alone.[12]
AbbVie’s complex strategy to delay this inevitable transition offers valuable lessons for companies across sectors. Companies facing patent cliffs can implement several strategies to maintain market position and revenue streams. The key lies in a proactive approach that begins years before patent expiration. Like AbbVie, companies typically employ a combination of the following strategies, each requiring careful consideration of timing, resources, and market dynamics.
Early Pipeline Development
Forward-thinking organizations begin developing their response to patent cliffs well before the approach of expiration dates. This strategy requires substantial R&D investment but can create a robust pipeline of innovations to offset potential losses.
The most effective pipeline development strategies share several key characteristics:
- Strategic alignment with core competencies
- A balanced portfolio of incremental and breakthrough innovations
- A clear focus on market needs rather than just technical capabilities
- Integration of customer feedback throughout development
Product Lifecycle Management
Effective lifecycle management involves strategically timing product improvements and launches to maintain market position. This strategy requires careful balance, as innovations must offer genuine value while making economic sense for the company and its customers.
AbbVie’s management of Humira demonstrates both the potential and pitfalls of this approach. The company secured over a hundred secondary patents covering manufacturing methods, new and potential formulations, and new delivery methods. 90% of these patent filings occurred after Humira was already on the market, half of which were filed in or after 2014—but prior to the original 2016 expiration date of Humira’s primary patent.[13] While this strategy successfully extended Humira’s market exclusivity in the US and resulted in billions in revenue, it also attracted regulatory scrutiny and public criticism, including claims that Humira’s patent portfolio was roughly 80% duplicative patents linked together by terminal disclaimers.[14]
That said, linking patents by terminal disclaimers is permitted by the United States Patent and Trademark Office (USPTO), covered under Section 1490 Disclaimers and its subsections.[15] And while the USPTO proposed a change to the terminal disclaimer practice in May of 2024, seeking “…that the patent with the terminal disclaimer will be enforceable only if the patent is not tied and has never been tied through one or more terminal disclaimers to a patent in which any claim has been finally held unpatentable or invalid over prior art,”[16] the USPTO formally withdrew the proposal in December 2024.[17]
Market Expansion Strategies
Expanding into new markets—whether geographic or demographic—can help offset revenue losses from patent expiration. This strategy requires:
- Careful analysis of market potential
- Understanding of local regulatory environments
- A clear assessment of the competition
While each industry operates with its own set of market dynamics, it’s important to have a thorough understanding of the investment required for market expansion to successfully offset patent cliff losses.
Strategic Partnerships and Acquisitions
Strategic partnerships and acquisitions can provide rapid access to new technologies, markets, or capabilities. Key considerations include:
- Technology Acquisition: Companies can acquire complementary technologies to strengthen their market position.
- Partnerships and Licensing: Market access partnerships can provide access to new markets or customer segments and can even resolve outstanding litigation. For example, in 2020, Xperi’s TiVo and Comcast entered a 15-year patent license agreement deemed effective as of the expiration of Comcast’s prior agreement in 2016 (which had resulted in a contentious legal battle between the two entities), providing broad coverage under TiVo’s patent portfolios until 2031.[18]
- Research Collaborations: Collaborative research initiatives can accelerate innovation while sharing costs and risks.
Integration of Multiple Strategies
As mentioned earlier, the most successful approaches to patent cliff management typically combine multiple strategies. Timing considerations also prove crucial for implementation. Companies typically need to begin preparation years before patent expiration to ensure successful execution. This preparation period allows for:
- Thorough market analysis
- The development of new technologies or products
- Additional patent filings
- The establishment of strategic partnerships
Of course, the success of these strategies often depends on careful alignment with specific industry market dynamics, the interconnected market as a whole, and individual company capabilities.
Patent Cliffs: Prepare Early
In the coming years, successful patent cliff management will likely require even greater integration between technical innovation and market strategy. Companies that view patent cliffs as opportunities for strategic renewal rather than simply challenges to overcome will be best positioned to maintain market leadership. Thus, the key lies not in avoiding patent cliffs entirely—which is rarely possible—but in building organizational capabilities that enable a softer landing, continuous innovation, and market adaptation.
The message is clear for business leaders across industries: The time to prepare for patent cliffs is well before they arrive, and the approach must be comprehensive rather than piecemeal. Those who embrace this challenge with strategic foresight and commitment to innovation will find opportunities where others see only threats.
[1] Anderson, Leigh A., Sanjai Sinha, Kaci Durbin, Sophia Entringer, Judith Stewart, Philip Thornton, Carmen Pope, Melisa Puckey, Sally Chao, and Kristianne Hannemann. “Generic Eliquis Availability.” Drugs.Com. December 12, 2024. https://www.drugs.com/availability/generic-eliquis.html.
[2] Burke, Hannah. “Top 10 Drugs With Patents Due to Expire in the Next Five Years.” Proclinical. Acacium Group, February 16, 2024. https://www.proclinical.com/blogs/2024-2/top-10-drugs-with-patents-due-to-expire-in-the-next-5-years.
[3] “Bristol-Myers Squibb Company Q3 2024 Financial Information: Worldwide Revenues Quarterly Revenues Trend Analysis.” BMS.Com. Bristol-Meyers Squibb Company, October 30, 2024. https://www.bms.com/assets/bms/us/en-us/pdf/investor-info/doc_financials/quarterly_reports/2024/BMY-Q32024-Financial-Information.xlsx.
[4] “Merck Announces Fourth-Quarter and Full-Year 2023 Financial Results.” Merck. Merck & Co., February 1, 2024. https://www.merck.com/news/merck-announces-fourth-quarter-and-full-year-2023-financial-results/.
[5] “Johnson & Johnson Reports Q4 and Full-Year 2023 Results.” Johnson & Johnson. Janssen, January 23, 2024. https://www.investor.jnj.com/news/news-details/2024/Johnson–Johnson-Reports-Q4-and-Full-Year-2023-Results/default.aspx.
[6] DeAngelis, Allison, and Adam Feuerstein. “With a Major Patent Cliff Coming, Will JPM Play Host to Some Serious Deal-Making?” STAT. Boston Globe Media, January 8, 2025. https://www.statnews.com/2025/01/08/jpm-2025-expiring-drug-patents-could-spur-pharma-mergers-acquisitions/.
[7] Berman, Bruce. “Latest Data Show that Intangible Assets Comprise 90% of the Value of the S&P 500 Companies.” IP Close Up. January 19, 2021. https://ipcloseup.com/2021/01/19/latest-data-show-that-intangible-assets-comprise-90-of-the-value-of-the-sp-500-companies/.
[8] Cruz, Travis. “The Impact of Patent Expirations on the Pharmaceutical Industry.” Journal of Chemical and Pharmaceutical Research 16, no. 5 (2024). Accessed January 9, 2025. https://www.jocpr.com/articles/the-impact-of-patent-expirations-on-the-pharmaceutical-industry-10233.html.
[9] Merelli, Annalisa. “How AbbVie Denied Americans Access to Fair Competition for Humira.” Quartz. G/O Media, December 14, 2022. https://qz.com/humira-abbvie-competition-from-cheaper-biosimilars-1849876888.
[10] “Overpatented, Overpriced, Special Edition: Humira.” I-MAK. Initiative for Medicines, Access, and Knowledge, September 22, 2021. https://www.i-mak.org/wp-content/uploads/2021/09/i-mak.humira.report.3.final-REVISED-2021-09-22.pdf.
[11] Walker, Leslie, and Dan Gorenstein. “AbbVie’s Blockbuster Drug Humira Finally Loses Its 20-Year, $200 Billion Monopoly.” NPR. January 31, 2023. https://www.npr.org/sections/health-shots/2023/01/31/1152513058/abbvies-blockbuster-drug-humira-finally-loses-its-20-year-200-billion-monopoly.
[12] Tailor, Neelam, Ali Assaf, Steve Glew, and Ryan Baxter. “How Big Pharma Keeps Affordable Drugs Out of Reach.” The Guardian. December 19, 2024. https://www.theguardian.com/business/video/2024/dec/19/how-big-pharma-keeps-affordable-drugs-out-of-reach-video.
[13] Knox, Ryan and Gregory Curfman. “The Humira Patent Thicket, the Noerr-Pennington Doctrine, and Antitrust’s Patent Problem” The Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School. September 11, 2022. SSRN: https://petrieflom.law.harvard.edu/resources/article/the-humira-patent-thicket-the-noerr-pennington-doctrine-and-antitrusts-patent-problem and http://dx.doi.org/10.2139/ssrn.4215822
[14] Goode, Rachel, and Bernard Chao. “Biological Patent Thickets and Delayed Access to Biosimilars, An American Problem.” Journal of Law and the Biosciences 9, no. 2 (2022): lsac022. Accessed January 9, 2025. https://academic.oup.com/jlb/article/9/2/lsac022/6680093.
[15] “1490 Disclaimers [R-01.2024].” USPTO. United States Patent and Trademark Office, Accessed January 9, 2025. https://www.uspto.gov/web/offices/pac/mpep/s1490.html.
[16] “Proposed Changes to Terminal Disclaimer Practice to Promote Innovation and Competition.” USPTO. United States Patent and Trademark Office, May 9, 2024. https://www.uspto.gov/about-us/news-updates/proposed-changes-terminal-disclaimer-practice-promote-innovation-and.
[17] “Terminal Disclaimer Practice To Obviate Nonstatutory Double Patenting; Withdrawal.” Federal Register. National Archives and Records Administration, December 4, 2024. https://www.federalregister.gov/documents/2024/12/04/2024-28263/terminal-disclaimer-practice-to-obviate-nonstatutory-double-patenting-withdrawal.
[18] “Xperi and Comcast Enter Into Long-Term Patent License Agreement.” Xperi Holding Corporation, November 9, 2020. https://investor.xperi.com/news/news-details/2020/Xperi-and-Comcast-Enter-Into-Long-Term-Patent-License-Agreement/default.aspx.