US Biopharmaceuticals: As Biopharma momentum gains, dynamics suggest pivot may be sustainable

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US Biopharmaceuticals: As Biopharma momentum gains, dynamics suggest pivot may be sustainable

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US Biopharmaceuticals

As Biopharma momentum gains, dynamics

suggest pivot may be sustainable

Industry Overview

Reasons for optimism as rally raises durability questions 29 June 2026

After a challenging start to ‘26, Biopharma sentiment has meaningfully improved (since Equity

May: NBI +8%, DRG +7% vs. SPX -3%). At a high level, we’ve argued dynamics have been United States

shifting for a while: Health Care fundamentals have been improving beneath the surface Biopharmaceuticals

as sector-specific headwinds eased (see our takes on fundamentals) while prior market Jason Zemansky

winners have become harder to underwrite. Among these, the rotation to Energy has Research Analyst

slowed (see our takes on the trade) with Tech facing more uncertainties around elevated BofAS+1 646 855 4280

valuations, crowded positioning, and returns on AI-related CapEx—creating a path to jason.zemansky@bofa.com

redeploy gains elsewhere. The key question, in our view, is whether this rotation can last; Jacqueline Plesset

Research Analyst

and while the move is admittedly evolving, we think Biopharma’s defensive profile and BofAS

earnings durability are becoming more attractive as investors look for relative stability. +1 646 855 0014

jacqueline.plesset@bofa.com

Positioning has improved, but may not be stretched SavitaEquity &SubramanianQuant Strategist

To be fair, funds have become more overweight Biotech over the last three months BofAS

+1 646 855 3878

(Exhibit 7), particularly relative to other Health Care subsectors (Exhibits 6) with long- savita.subramanian@bofa.com

only exposure now back above its historical average (Exhibits 4-5). Still, we see reasons