2Q26 Earnings Preview - Product cycles and M&A

Research evidence excerpt

2Q26 Earnings Preview - Product cycles and M&A

Idea

July 7, 2026 09:23 PM GMT

Morgan Stanley & Co. LLCMBiopharma | North America Terence C Flynn, Ph.D.

Equity Analyst

2Q26 Earnings Preview - Terence.Flynn@morganstanley.comAlexander Yevdokimov, Ph.D. +1 212 761-2230

Research Associate

Alexander.Yevdokimov@morganstanley.com +1 212 761-2167

Product cycles and M&A Chris Yu, J.D., Ph.D.

Chris.L.Yu@morganstanley.com +1 212 761-2535

We adjust our models for IQVIA trends as well as intra-quarter Connor M Massari

updates; see Ex. 4-5 for where we expect 2Q beats/misses. EquityConnor.Massari@morganstanley.comAnalyst +1 212 761-2417

Within US large caps, we are OW ABBV/GILD/JNJ/LLY and UW Hailey Horowitz

BMY. ResearchHailey.Horowitz@morganstanley.comAssociate +1 212 761-5264

Damien H Kerner

Fundamentals should come back into focus as macro recedes. The DRG/NBI have Research Associate

traded up +11%/+18% vs. S&P500 +10% as of July 6; multiple expansion/contraction Damien.H.Kerner@morganstanley.com +1 212 761-3829

has been more of a driver of recent stock performance as opposed to estimate Morgan Stanley India Company Private Limited+

Saket Agarwalrevisions ( Exhibit 1 - Exhibit 2 ). The macro has been a key driver of large cap

Biopharma performance over the first half of the year, looking into the second half Saket.Agarwal@morganstanley.com +91 22 6995-4012

we expect fundamentals to be more of a driver. We prefer stocks with upside from

Biotechnology

product cycles and/or pipeline catalysts. To this end we introduce a series of new North America

exhibits (see Exhibit 15 for example) to track product cycle performance Industry View Attractive

Major Pharmaceuticals

(magnitude of beats vs. misses for last nine quarters, and we bucket products based

North America

on LOE stage).