The New Frontier - Your weekly science and innovation update - 9th February 2026

Big pharma earnings: reinvention under pressure

It’s earnings season and big pharma is navigating a critical inflection point. The latest results from GSK, Eli Lilly, Novo Nordisk, Merck, Novartis, and Pfizer reveal an industry under pressure from three fronts: patent cliffs, drug pricing, and the need to restructure and reinvest for future growth while controlling costs.

The playbooks vary. Eli Lilly is riding high on demand for GLP-1 weight-loss drugs, with Q4 sales up 43% and full-year 2026 revenue projected at $80bn-$83bn. Novo Nordisk, by contrast, is facing "unprecedented pricing pressure" and forecasts a 5-13% sales decline in 2026. It has already begun layoffs and is prioritising targeted investments in pipeline and commercial growth. Pfizer, now past the peak of its COVID windfall, is pruning its pipeline and reinvesting savings into late-stage programmes. Sales of its COVID pill fell 57% last year, but its non-COVID portfolio still managed 6% growth. The company is moving "full speed" into the obesity market. GSK continues its strategy of focused R&D and targeted M&A, with an ambition to exceed £40bn in sales by 2031. It recently announced 350 job cuts in R&D, even as it increased total research spend. Merck is progressing a long-term transition plan to offset dependence on Keytruda, while Novartis faces a $4bn revenue gap in 2026 but expects momentum from scaling high-growth assets in H2.  In this context real estate must move upstream, shaping the transformation agenda rather than reacting to it. When aligned with strategy, CRE becomes a lever for organisational speed, cultural cohesion, talent attraction, and operational resilience. 

AI scaleups and where they land

The Startup Coalition’s new AI Index profiles the UK's 1,000 top AI scaleups. Together, they have raised over £20.2bn and are valued at £45bn plus, employing more than 35,000 people. 65% are based in London, reinforcing the capital’s dominance. Business services account for nearly 40% of all firms, followed by financial services and health.

Founders emphasise the UK’s comparative advantage at the application layer, building tools on top of foundation models to solve real-world problems in industry verticals. Scaling challenges remain namely the UK’s risk aversion, limited domestic market scale, and access to capital and data. UK AI sovereignty was also cited as important.

The data highlights London’s emerging yet increasingly resilient AI sector, where much of the incoming demand is likely to stem from startups with smaller space requirements. The established approach is to support these young companies with not only the right physical infrastructure but also the soft infrastructure that enables them to grow, scale, and eventually commit to larger, longer‑term leases. It also underlines that the sources of future demand extend well beyond the foundation model developers often quoted in the press. To understand the true opportunity, we need to look past the obvious players and consider the full breadth of the AI stack.

Gene therapy partnerships, a UK-Japan R&D bridge, and drug pricing

New international science and technology deals will shape future foreign direct investment. During a recent visit to Tokyo, UK officials announced a package of UK–Japan collaborations including:

• £11m investment by Kyowa Kirin (via Orchard Therapeutics) in UK gene therapy manufacturing, pending terms under the Life Sciences Innovative Manufacturing Fund
• A new genomics screening partnership between Oxford Nanopore and Genesis Healthcare
• £6m in co-funded research into next-gen connectivity, and nearly £10m into quantum tech

Meanwhile, there was confirmation that the cost of the drug pricing deal with the US (initially around $1bn over three years) will come out of the Department of Health and Social Care budget.  The pharma pricing deal agreed last year means that tariffs on medicines imported into the US from the UK will remain at 0%, but the UK pledged to raise its spending on new medicines by 25%.  From a real estate perspective, the key question is whether these concessions will be sufficient to attract further large‑scale investment into the UK.

Signals from Alexandria Real Estate Equities

Alexandria Real Estate Equities beat Q4 2025 revenue expectations but flagged a cautious 2026 outlook as they recorded $1.45bn in impairments.  Management noted weak venture funding, slower leasing decisions, and company hesitancy to expand. It is planning $2.9bn in asset sales and partial interest dispositions in 2025 as well as currently evaluating four developments for pause or disposal. The REIT has also been selectively extending rent free periods.

Mitigation strategies listed in their financial filing that may provide a playbook for others in the industry include:

• Deepening relationships with top-tier venture capital firms and academic institutions to identify and support high-potential tenants earlier in their life cycle.
• Expand proprietary products to offer operational support, shared infrastrcutures, and flexible leasing models that improve capital efficiency for emerging companies.
• Exploring strategic partnerships with pharma companies, CROs and investment-grade institutions to create more stable demand anchors.
• Convening influential stakeholders through its annual summt even series.
• Explore alternative uses, for example tech tenants that require specialised R&D space.

Industrial insight: Temperature-controlled demand rising

Claire Williams’s new logistics future gazing report flags increased demand for temperature-controlled logistics, driven by biologics, vaccines, gene therapies and GLP-1 drugs. This is paired with demand from food and beverage sectors. A third-party report projects the UK market for temperature-controlled pharmaceutical packaging will grow from $8.9bn in 2025 to $15.7bn by 2031. Specialist warehouse space with cold-chain capabilities is emerging as a distinct sub-sector with strong investor and occupier interest. Supply remains constrained.

Other Headlines

• ElevenLabs hits £11bn valuation after a £368m round
• OpenAI & Booking.com to launch SME accelerator across 6 European markets
• Five banks pledge £11bn in lending to support UK small business growth
• Automata raises $45m for AI-first lab automation; counts 5 top pharma clients
• Barnsley named UK’s first "Tech Town"
• Oxford Biomedica expands lentiviral vector supply partnership with BMS
• Manchester hosts international meeting on business and diversity
• UKRI confirms £1.5bn in new life sciences R&D investment
• This week saw a number of US biotech IPO announcements – Eikon Therapeutics IPO marks the largest biotech IPO since 2024; Flagship’s Generate files for an IPO in a key test for Tech Bio and Veradermics raised $256m.

Forward Look
Next week: A breakdown of Big Tech earnings in the context of share price volatility and continued noise around a potential AI bubble.