In Part 1 of this series, we explored why the ADC land grab is happening now and how ADCs fit within the broader landscape of cancer therapies, highlighting the paradigm shift triggered by Enhertu and the evolving player landscape. In Part 2, we took a closer look at ADC structure—antibody, payload, linker, and conjugation—and discussed what people mean by first-, second-, and “third-generation” ADCs.
In this third part, we shift our focus from technology to money and strategy and ask: How are patent cliffs driving the current rush into ADCs?
We will address questions such as:
・Why are big pharma companies increasingly positioning ADCs as core growth engines for the next decade?
・What does the 2025–2030 patent cliff look like, and how are companies planning to fill the revenue gaps?
・How should we interpret ADC deals and acquisitions not just as “good assets” but as elements of a broader portfolio strategy?
For readers new to the topic, this article aims to provide a basic map for understanding “patent cliffs and ADCs” as a linked story. For practitioners in pharma, VC, and consulting, the goal is to offer a set of lenses for positioning ADC programs within corporate portfolios and deal strategies.
What Is a Patent Cliff and Why Does It Matter So Much?
The “Cliff” in Revenue After Loss of Exclusivity
Let us start with the basics of the patent cliff. When patents expire, generics or biosimilars enter the market. Price erosion and share loss typically cause the originator’s sales to drop sharply over just a few years. If you plot revenues over time, you see a steep cliff-like drop at loss of exclusivity.
The impact goes far beyond “one product selling less.” For a blockbuster generating hundreds of millions or billions of dollars annually, a patent cliff can:
- significantly reduce overall company revenue and margins,
- constrain R&D spending and M&A capacity,
- affect how equity markets value the company (share price, market cap).
This is why big pharma executives constantly ask: “How much of the revenue drop can we pre-emptively offset before loss of exclusivity hits?”
The Timing and Magnitude of Patent Cliffs
Looking from the vantage point of 2025, many global pharma companies are facing substantial patent cliffs in the late 2020s and early 2030s, including major products in immuno-oncology, metabolic disease, and other large therapeutic areas.
While the exact shape varies by company, a common pattern is:
- annual revenue declines on the order of several billion dollars per year,
- with multiple years of significant erosion.
To bridge these “valleys,” companies combine several approaches:
- life-cycle management of existing products (new formulations, routes, combinations),
- strengthening internal pipelines (accelerated in-house R&D),
- adding external pipelines via M&A and licensing deals.
ADCs have emerged as one of the most important themes in this last category—external pipeline building.
Why ADCs Are Being Chosen as Patent-Cliff Offsets
One Modality with “Multi-tumor + High Value per Patient” Potential
New drugs that can meaningfully offset patent cliffs generally need to satisfy three conditions:
- (1) Sufficient revenue potential (eligible patients × price × treatment duration),
- (2) A reasonably readable risk profile (probability of success, safety predictability),
- (3) Extensibility within the portfolio (room for follow-on indications and products).
ADCs can credibly meet all three. They can:
- expand across multiple solid and hematologic malignancies (sometimes in a tumor-agnostic fashion),
- operate in high-value oncology markets where each additional indication can significantly grow revenue,
- benefit from established “patterns of success and caution” derived from Enhertu and other frontier ADCs.
In other words, ADCs offer a way to build multiple revenue pillars under a single modality, which is an attractive property when designing patent-cliff mitigation strategies.
From “Zero-to-One” Gamble to Structured Expansion
As we discussed in Part 2, the Enhertu generation of ADCs has done more than succeed as individual products. They have:
- demonstrated how Topo-I payloads and by-stander effects can expand eligible patient populations,
- shown the feasibility of multi-tumor expansion,
- helped regulators, clinicians, and payers learn how to evaluate and use ADCs.
For big pharma, this means that ADCs are no longer a “complete leap into the unknown”. Instead, they represent a class where you can:
- build on proven design patterns,
- operate within increasingly familiar regulatory and clinical frameworks,
- structure platform-based portfolios (multiple ADCs built on shared backbones).
The risk profile is still substantial at the individual-project level, but the modality itself now has enough precedent to support portfolio-level planning.
Filling the Gaps Left by Small Molecules, IO, and CAR-T
The success of existing modalities has made the remaining gaps more visible. These include:
- tumor types and patient subsets with modest response rates to IO,
- settings where small molecules or naked antibodies face resistance or off-target toxicity,
- solid tumors where CAR-T and other cell therapies are still difficult to deploy at scale.
ADCs, combining antibody-based targeting with potent payloads, are well-positioned to address some of these residual needs. They are not simply about “replacing” existing modalities but about completing the picture of oncology portfolios. From a patent-cliff perspective, this makes them attractive not only as revenue generators but also as strategic assets that strengthen the overall logic of the oncology franchise.
Typical Big-Pharma Patterns: Patent Cliffs × ADC Strategies
Pattern 1: Acquiring ADC Companies to “Fill the Gap in One Shot”
The most visible pattern is the acquisition of ADC-focused companies with:
- one or more approved ADCs,
- a pipeline of follow-on ADCs (second- and third-generation candidates),
- valuable platform assets (novel payloads, linker technologies, conjugation know-how).
Instead of licensing individual molecules, big pharma can:
- internalize entire ADC platforms,
- gain control of multiple near- and mid-term revenue drivers,
- consolidate manufacturing, CMC, and regulatory capabilities.
This strategy is particularly attractive for companies facing large and imminent patent cliffs. Using cash and stock, they attempt to “fill a multi-year revenue gap in one shot” by bringing an ADC portfolio in-house.
Pattern 2: Large Licensing Deals to Build ADC Revenues Modularly
A second pattern is the use of large-scale licensing deals for specific ADCs or baskets of ADCs. Here, companies:
- focus on targets and indications that align with their existing oncology footprint,
- structure deals to account for future indication expansions and combinations,
- use upfront + milestones + royalties to share risk and spread payments over time.
Such deals allow companies to build ADC revenues in a more modular way, bridging patent cliffs through a series of assets rather than a single transformational acquisition.
Compared with M&A, licensing requires less upfront capital and can be better balanced against other modalities (IO, small molecules, cell therapy). On the flip side, governance becomes more complex: alignment with biotech partners on trial design, indication prioritization, and commercial strategy is critical.
Pattern 3: Hybrid Strategies Combining In-house Platforms and External Partnerships
A third pattern is a hybrid approach, where big pharma companies:
- build their own ADC platforms (antibodies, payloads, linkers, conjugation),
- partner with biotechs on specific targets or tumor types to accelerate development,
- mix fully owned, co-developed, and licensed-in ADCs within a broader portfolio.
In this case, the patent cliff is not filled by a single hero product but by a cluster of ADCs:
- wholly owned ADCs,
- co-development programs with shared costs and rights,
- in-licensed ADCs with specific territorial or indication rights.
The objective is to reach cumulative ADC revenues in the hundreds of millions to billions of dollars per year, not from one blockbuster alone but from a diversified ADC franchise.
Interpreting Post-2025 ADC Deals: What Gaps Are They Trying to Fill?
Look Beyond Deal Size: Compare It to the Revenue Gap
Headlines often emphasize deal size: “Company X buys ADC company Y for several billion dollars.” From a strategic standpoint, the key question is: “How does this compare to the company’s patent-cliff-induced revenue gap?”
If a company expects to lose, say, 5 billion dollars of annual revenue over the next 5–7 years due to patent expiries, and believes an ADC franchise can eventually generate 3–4 billion dollars at peak, then a multi-billion-dollar investment may be rational, especially if:
- the internal pipeline alone cannot realistically cover the gap,
- other modalities with comparable risk–reward profiles are scarce.
In other words, ADC deals must be read relative to the size and timing of the cliff, not in isolation.
Is the Deal Paying for a Single Product or for a Platform?
Another crucial lens is to distinguish between paying for: (1) a single existing product versus (2) a platform plus a pipeline.
Components that may be bundled into a high-priced ADC deal include:
- cash flows from one or more marketed ADCs,
- follow-on ADCs in clinical or preclinical development on the same backbone,
- underlying platform technologies (site-specific conjugation, proprietary payloads, manufacturing expertise).
When all of these are in play, what looks like an “expensive acquisition” may actually be a purchase of “options for the next decade”.
Similarly, a licensing deal that seems expensive for a single ADC may, upon closer reading of the contract, include:
- options on additional indications and combinations,
- access to parts of the platform technology.
The distinction matters because platforms can support multiple revenue streams over time, whereas single-product bets have more binary outcomes.
Facing the Risk of “ADC Saturation” Around 2030
Looking ahead from 2025, a new concern is emerging: the risk of ADC saturation. Potential issues include:
- crowded competition around specific targets (e.g., HER2, TROP2),
- smaller-than-expected market share for individual ADCs in highly competitive indications,
- stronger price pressure from payers within ADC classes.
To manage this risk, companies are increasingly:
- clarifying differentiation points within ADC classes (efficacy, safety, dosing, patient subsets),
- building diversified portfolios across multiple tumors and lines of therapy,
- combining ADCs with other modalities (bispecifics, cell therapies) to create unique treatment positions.
Overreliance on ADCs to solve patent cliffs could lead to ADC-heavy portfolios that are vulnerable if class-level dynamics change. Most companies are therefore trying to calibrate the ADC share of their oncology portfolios rather than betting everything on this single modality.
VC and Consulting Perspectives: Evaluating ADCs in a Patent-Cliff Context
VCs: Understanding the Patent-Cliff Structure of Potential Buyers
For VCs backing ADC biotechs, it is not enough to ask whether the science is strong. It is equally important to understand the patent-cliff structures of potential acquirers or partners:
- Which big pharma companies face major revenue gaps, and when?
- How might your ADC fit into their oncology franchises (by target, tumor type, line of therapy)?
- Is your program filling a single-product gap or contributing to a broader ADC platform story?
Working backwards from these questions can clarify:
- which indications and endpoints to prioritize,
- which data packages are most likely to trigger interest,
- when and how to position the company for licensing or acquisition.
Consultants: Making Clients’ “Gaps to Fill” Explicit
Consulting firms advising pharma on ADC strategy typically start by:
- mapping the client’s patent cliffs and revenue gaps over time,
- estimating the gap-filling potential of the internal pipeline (in risk-adjusted terms),
- deciding how much of the remaining gap should be covered by ADCs versus other modalities.
From there, they compare options such as:
- acquiring ADC-focused companies,
- closing large licensing deals for specific ADCs,
- building or expanding in-house ADC platforms.
The key question is not simply “Should we invest in ADCs?” but “To what extent should we rely on ADCs, given our specific cliff profile and portfolio structure?”
My Reflections
When we look at patent cliffs and the ADC land grab side by side, it becomes clear that this is not a coincidence. ADCs are being chosen as one of the main answers to a fundamental question: “How do we design the shape of our revenue and our portfolio over the next decade?”
If we only look at individual ADC deals, it is easy to get caught up in headlines about “another mega-deal” or “high acquisition prices.” But behind each transaction lies a company-specific combination of “the revenue gap it needs to fill” and “the oncology story it wants to tell.” ADCs are powerful tools for filling those gaps, yet overdependence can lead to ADC-heavy portfolios with their own vulnerabilities.
In my view, ADCs are highly likely to become one of the pillars of oncology over the next 10 years, but that does not mean they are the only pillar. The deeper lesson is about modality balance and long-range portfolio design under patent-cliff pressure. In Part 4, we will move from strategy back to deals, dissecting real-world ADC transactions—M&A, licensing, and CDMO agreements—to identify what non-specialists should look for behind the headline numbers.
This article has been edited by the Morningglorysciences team.
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