Pharma industry to deliver strong growth – despite price pressure
pharmafile | September 7, 2015 | News story | Sales and Marketing | Moody’s, financial ratings, industry, industry growth, pharma, pharma industry
The global pharma industry will buck the trend of growing pricing pressure and deliver strong growth in profits, according to a major financial analysis firm.
Moody’s Investor Services predicts that the successes of new products will “more than offset the downward pressure on drug prices”, according to its latest outlook update. As a result, the financial ratings experts say the outlook for the industry is positive, and it predicts an annual growth rate of 4%-5% for the industry over the next 12-18 months.
Moody’s raised its outlook rating for the industry, from stable to positive, and cited the boost from new product launches in immuno-oncology, as well as the shot in the arm the global industry has been given by recent pharma mega-mergers by Allergan and Valeant, as reasons for the improved outlook.
“Oncology is currently the industry’s biggest growth opportunity, with newly launched cancer drugs, such as Bristol-Myers Squibb’s Opdivo (nivolumab) and Merck’s Keytruda (pembrolizumab), having significant upside,” says Michael Levesque, a senior vice president at Moody’s. “Innovation, alongside research and development productivity improvements, has also produced stronger late-stage pipelines, which means other new products will be launched over the next 12 to 18 months.”
“We expect acquisition activity to remain strong, given the cost-saving opportunities, the emergence of high-potential pipeline drugs, and companies’ desire for greater scale and diversification,” Levesque adds.
Prices for the majority of products in the US will rise, driving further growth, according to the report. There will also be savings and cost reductions from mergers and acquisitions, which will continue to support growth through 2016, “particularly within the specialty pharmaceutical category where acquirers such as Allergan and Valeant will obtain cost reductions,” the report finds.
However, the global pharma industry still faces the longer-term challenge regarding the sustainability of high drug prices. Moody’s says drug pricing remains an ongoing challenge outside the US, which is affecting profitability in both Europe and Japan where the use of generic drugs is rising.
In addition, upcoming launches of biosimilar products will begin to steadily erode the sales of blockbuster biotech products, such as Amgen’s Neulasta (pegfilgrastim) and the European sales of Pfizer’s Enbrel (etanercept).
Lilian Anekwe
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