Moody’s On European Pharma: A Negative Outlook
5 CommentsBy Ed Silverman // September 11th, 2008 // 1:51 pm
The ratings agency says European drugmakers - including Roche, Glaxo, Sanofi-Aventis, AstraZeneca, Novartis, Novo Nordisk, Merck KGgA and Nycomed - won’t be so creditworthy over the next year and a half. Why? Let’s start with the usual problem: a significant amount of revenue to be lost from patent expirations between 2010 and 2013. Other issues raised, good and bad, are in the report…
- Generic manufacturers are becoming increasingly aggressive competitors.
- Pipelines do not always appear sufficient to offset patent expiries.
- The bar is higher for approvals, especially in the US, increasing the risk of delays and non-approvals.
- Pricing pressure from health authorities is trending upward.
- Financial policies becoming more aggressive through M&A and share buybacks.
- Cash flow generation and profitability are still strong, growth opportunities remain good and the industry should not be materially affected by current recessionary pressures.
- Balance sheet and credit metrics remain robust in general and create a cushion to absorb potential negative events.
“In our view, there is a continued degree of event risk in the sector but we note that a number of large M&A transactions were completed or announced over the past year. We would therefore expect M&A activity to be somewhat more limited in the near term as companies concentrate on integrating the acquired businesses,” Moody’s writes.
“As share prices have suffered in line with setbacks from pipelines and non-approvals from the FDA, companies have also come under pressure to boost share buyback plans. It is likely that financial policies will continue to be more shareholder-friendly than they had been in the first part of the decade. We cannot rule out that acquisition and share buyback activity could put pressure on some ratings over the next 12-18 months.”
Dan A.
Half of the top ten pharma companies are European.
Novartis is in a Federation with the U.S. and Australia. And they were in alliance with Hitler while our citizen were dying over 60 years go. And we support them. They kept Hitler’s stolen gold stolen from Jews due to greed and abuse. It’s true. Imagine what else they are capable of doing. If I’m wrong, please arrest and kill me.
By American, right?
We hate the French is the message, and there is Sanofi Advencis.
Lawmakers could care less where they receive thier money.
Roughly half of the pharma income comes from the U.S.
We should be more cautious with our alliances and limitatons should exist, yet do not.
Yet it seems they could care less as long as others profit from them
I remain frustrated as long as I’m alone without others who are willing to massively protest what is clearly wrong.
Jack2
- The bar is higher for approvals, especially in the US, increasing the risk of delays and non-approvals.
The FDA may deny it, but it seems that at least one group who needs to ..
A) study the industry closely, but
B) doesn’t have an obvious bias on whether to report good or bad news
..thinks the bar moved.
For Dan A
Dan,
If you want to come down on a company learn how to spell. It is Sanofi-Aventis
Dan A.
Thanks, but I did not think i mentioned that company?
Dan A.
for dan a,
your right. i cought it. typographical error, that’s all.