According to JP Morgan, U.S. large-cap biopharma stocks have underperformed the broader market for two consecutive years, with mixed sentiment shaping investor outlook for 2025.

Despite strong fundamentals and advancements in drug pipelines, factors such as political uncertainty and sector rotation have hindered the sector’s performance relative to the S&P 500.

In 2024, biopharma stocks rose by 9.6%, falling short of the S&P 500’s 28.5% surge. However, JP Morgan analysts maintain a positive outlook for several key players.

Ahead of the 2025 JPM Healthcare Conference, JP Morgan highlights some investor expectations as sentiment remains mixed for the US Large Cap BioPharma group heading into 2025. The conference is scheduled between 13 January and 16 January.

Obesity is expected to remain a major focus for the industry. The sector’s focus on the below advancements highlights the growing importance of obesity treatments and related drug innovations:

JP Morgan analyst Chris Schott expects a strong adoption once broader insurance coverage, expected by the second half of 2025, is in place.

Gilead Sciences Inc (NASDAQ:GILD) is also preparing for a mid-2025 launch of lenacapavir for pre-exposure prophylaxis, with promising uptake projected into 2026.

The analyst is watching for updates on how companies are approaching business development after a relatively quiet 2024. While major changes are not anticipated in the size or type of deals pursued by large-cap companies, JP Morgan expects M&A activity to pick up in 2025.

Large deals over $25 billion remain unlikely, with mid-sized deals around $5-15 billion likely to focus on later-stage, lower-risk assets.

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