Biotech Spent Four Years Being the Wallflower at the AI Dance
Not everything worth owning has "AI" in the pitch deck.
With so much attention (and capital) flowing into the AI value chain, it's easy to forget the market is bigger than one theme. Biotech is a good example. The sector lagged the broader market for roughly four years, but it's been showing early signs of a resurgence.
Part of what's changed is structural. Big Pharma is staring down a patent cliff, with an estimated $300 billion-plus in branded revenue exposed to loss of exclusivity this decade, and that's driving a wave of dealmaking to refill pipelines. Q1 2026 was one of the strongest quarters for biopharma M&A since 2020. At the same time, sector valuations have reset to levels many consider low by historical standards.
For investors thinking about balancing their portfolios with growth stories outside the AI trade, biotech is one area worth a closer look. Diversifying across different drivers of growth is rarely a bad instinct.
Curious how an area like this might fit alongside the rest of your portfolio? Always happy to talk it through.
Mid-year Equity Outlook - Lord Abbett
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