Pharma Revenue Concentration Risk

One Drug Can Carry the Whole Company

Concentration is the simplest pharma risk measure: largest-product revenue divided by total revenue. Above 25–30%, one event on that drug moves the whole company: a patent expiry, a safety label change, or a Medicare price set under the Inflation Reduction Act (IRA), which lets Medicare negotiate prices on older drugs. Above 40%, the company’s value rests mainly on one product’s patent calendar and on whether new drugs can replace it.

The ratio says where to look, not what a company is worth. Above 40%, model that product’s loss of exclusivity (LOE), when generics or biosimilars may enter, as its own line. A diversified group such as Pfizer or Johnson & Johnson raises different questions from a franchise that is still growing fast.

FY2025 Largest-Product Share, Six Filers

Novo’s 41.1% counts Ozempic alone. Semaglutide, the molecule inside Ozempic and two other Novo brands, was 73.9% of FY2025 net sales (DKK 309,064M). At Lilly, Mounjaro alone was 35.2%; the tirzepatide franchise was 56.0% of $65,179M.

Concentration Screens

Screens are starting points. AbbVie also carries Rinvoq (13.6%) and a fading Humira (7.4%), so its immunology business rests on two growing products. Johnson & Johnson’s 15.2% DARZALEX share sits below the 25% line, but STELARA (~6.5%), another psoriasis and Crohn’s drug, faces biosimilars, and the group has a MedTech business the pure drugmakers lack.

A Growing Franchise and a Dated Cliff Read Differently

Growing. Lilly’s tirzepatide at 56.0% and Novo’s semaglutide at 73.9% are high because demand for GLP-1 drugs, the diabetes and obesity class both belong to, is growing faster than everything else they sell. Their near-term patent exposure is smaller. At Lilly, ~20.6% of revenue sits in Trulicity (diabetes), Jardiance (diabetes and heart failure) and Verzenio (breast cancer), which face a mix of patent expiries and IRA prices. At Novo it is ~2.2%: semaglutide’s sales in China, where its compound patent ends in 2026. Novo’s older diabetes and obesity drugs, Victoza and Saxenda (2.0%), have already lost protection. The risks to the growth drugs are supply, competition and new pill forms.

A dated cliff. Merck’s Keytruda, at 48.7%, loses compound patent protection in December 2028 (possibly extended into 2029) and expects an IRA Medicare price from January 2029: the clearest single-product cliff of the six. AbbVie has already absorbed Humira biosimilars (US revenue down 62% from 2022 to 2024, per its 10-Ks) while Skyrizi and Rinvoq refill the portfolio.

Pair every concentration reading with a forecast of that product’s sales after LOE and its dated events in the patent expiry calendar.

Worked Example: A Keytruda Revenue Stress

Merck FY2025 total sales: $65,011M. Keytruda: $31,680M (48.7%).

If Keytruda revenue fell 50% with no offset (an illustrative stress, not a forecast), group sales would drop about 24% from that product alone. A peer whose largest product is 15% of sales would lose about 7.5%. Costs would not fall as fast: Merck’s operating margin was ~32.6% (computed from filed components) with R&D at 24.3% of sales, so profit would fall faster than sales unless new drugs replace Keytruda.

See the Merck research profile for LOE dates and pipeline context.

Dividends and Concentration

Concentration and GAAP payout are separate questions. Lilly pays out 26.1% with 56.0% of revenue in tirzepatide. Pfizer’s ~126% GAAP payout comes from amortisation and write-downs; its largest drug, Eliquis, is only 12.7%. The GAAP payout trap guide explains why. For cliff exposure, start with concentration and LOE dates, then cash flow, then payout.