This year's biotech laggards primed for 2026 recovery, says Goldman Sachs' Richter

Core Viewpoint - The biotech sector is experiencing a rebound in 2023, with expectations for continued recovery into 2026, despite initial pressures and a rough start to the year [1]. Group 1: Market Dynamics - Stocks of pharmaceutical companies that recently engaged in deals with the administration have traded higher, indicating a positive market response despite price reductions to align with global standards [2]. - The removal of uncertainty regarding drug pricing has allowed companies to adjust their business models accordingly, leading to potential revenue upside [3][4]. - The stabilization of negative earnings revisions after nearly three years suggests a potential upside for the biotech sector as it approaches 2026 [7]. Group 2: Regulatory Environment - Agreements signed with the Trump administration regarding drug pricing have provided clarity for companies, enabling them to better navigate their business models [8]. - There is ongoing uncertainty in the vaccine sector, particularly regarding regulatory frameworks, which may impact stock performance [8]. Group 3: Investment Opportunities - For large-cap stocks, Amgen and Regeneron are identified as having upside potential, while Biogen is seen as a laggard [9]. - The focus for small to mid-cap stocks includes innovation in cardiovascular disease, obesity treatments, and mergers and acquisitions (M&A) as key themes for the upcoming year [9]. - Cancer treatment is highlighted as a significant area of focus for future investments [10].