Pharma is recovering, says Moody’s
pharmafile | September 25, 2012 | News story | Business Services, Manufacturing and Production, Research and Development, Sales and Marketing | Moody's, Plavix, austerity, generics, pharma
Credit ratings agency Moody’s believes that the travails of the past few years, when various big-selling drugs went off-patent, are largely behind the global pharma sector.
In a new report ‘The Worst Is Over’ it has revised its outlook for the industry worldwide from ‘negative’ to ‘stable’ – news which could lead to greater interest in pharma from investors looking at where to put their money.
“The stable outlook reflects our view that the worst of the industry’s blockbuster patent expirations has passed,” said Michael Levesque, senior vice president at Moody’s.
This means it expects a more favourable environment for pharma in the next 12-18 months than in the past year, when brands like Pfizer’s statin Lipitor and Sanofi and Bristol-Myers Squibb’s heart drug Plavix went generic.
“Although industry earnings will still be affected by very recent patent expirations, earnings for large, branded players will reach a trough point in late 2012 and rebound in 2013,” Levesque added.
Moody’s has held its negative view of pharma since October 2007 and it has an influential voice, with financial markets and investors setting great store by its opinions on companies’ and governments’ capacity to repay debts, for example.
However, its pronouncements are not guarantees and Moody’s has made serious errors of judgment in the recent past.
Prior to the global financial meltdown in 2008 it, along with other similar agencies, declared that large numbers of financial instruments based on sub-prime mortgages were safe investments – an opinion which proved to be catastrophically wrong.
Despite its change of heart on pharma, Moody’s insists there are still bumps in the road to come for the industry: it highlights pressure on governments’ healthcare spending and the increased use of generic products as major challenges.
It also warns of “a difficult regulatory approval environment for new products” and points out that various areas of research, such as Alzheimer’s Disease, remain dogged by failure.
Some major companies with recent patent expiries, including BMS and AstraZeneca (which lost patent protection on its antipsychotic Seroquel this year) will still face year-on-year declines in earnings during the remainder of 2012 and into 2013, Moody’s says.
However, the rise of generics will benefit companies such as Teva Pharmaceutical Industries, Watson Pharmaceuticals and Mylan Inc – although ongoing price erosion and stringent manufacturing compliance requirements will cut into profits, the agency concludes.
Adam Hill
Related Content
LGC Group opens $100M Organic Chemistry Synthesis Centre of Excellence
LGC Group, a life sciences company, has opened its new Organic Chemistry Synthesis Centre of …
Johnson & Johnson announces successful results from trial for myeloma treatment
Global healthcare company, Johnson & Johnson, announced that analysis of its Darzalex (daratumumab) therapy showed …
Bend Bioscience adds commercial spray drying facility to Georgia site
Bend Bioscience has announced the addition of a commercial-scale spray dryer and a Gerteis dry …
