10 February 2009 17:20 [Source: ICIS news]
By Anna Jagger
LONDON (ICIS news)--Pharmaceutical companies are decreasing their reliance on blockbuster medicines and diversifying their product mixes ahead of a high number of patent expiries, industry observers said on Tuesday.
Almost all big pharmaceutical companies have a number of large patent expiries coming up between now and 2012, said Chris Stirling, European head of chemicals and pharmaceuticals at KPMG.
“It is clear that relying on a small number of blockbusters is more risky now than it was in the past,” he remarked.
Brokerage ING said that, as a result of patent expiries and pressure on prices, it expects some pharmaceutical companies to suffer a long-term earnings decline, starting as early as 2010.
“The pharma industry is entering unchartered territory over the next few years,” said ING analyst Craig Maxwell.
When generic competitors enter the market, they can command 80% of the sales within a year, destroying the profitability of that drug, noted another analyst, who preferred not to be named.
Pharmaceutical companies are finding it increasingly difficult to develop the new drugs they desperately need to offset the decline in revenues that will occur when blockbuster patents expire, observed Andrew Hill, head of European pharmaceuticals R&D (research and development) at Accenture. At the same time, the regulatory environment is becoming more challenging.
To maintain growth, companies are already making some significant changes.
Pfizer, which faces the patent expiry on its blockbuster anti-cholesterol drug Lipitor, has acted decisively by announcing the $68bn (€52bn) acquisition of
Another pharmaceuticals mega deal is not expected any time soon, although smaller-scale acquisitions – of individual products or biotechnology companies with promising drugs in late stage development, for example – will continue to help producers fill gaps in their portfolios,
Companies such as GlaxoSmithKline (GSK) and Sanofi-Aventis are increasing their focus on consumer products, to reduce their reliance on high risk pharmaceuticals, said Andrew Jones, a senior pharmaceutical analyst at Ernst & Young.
There is also an increased focus on emerging markets, combined with a move into generic pharmaceuticals.
($1 = €0.77)
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