|[December 10, 2013]
Fitch: Low Growth but Stable Outlook for Global Pharmaceuticals in 2014
CHICAGO --(Business Wire)--
Link to Fitch Ratings' Report: 2014 Outlook: Global Branded
Pharmaceuticals (Manageable Risk Profile)
Fitch Ratings forecasts low single-digit revenue growth for the global
pharmaceutical industry although ratings will remain stable in 2014, as
detailed in its 2014 outlook report.
Patent expirations, government cost-containment policies in Europe and
weak employment in the U.S. will only be partially offset by the uptake
of new products in the marketplace and strong growth in emerging
markets. In response, Fitch expects ongoing industry restructuring in
2014. Companies are likely to continue reining in spending on sales and
marketing, R&D and other administrative functions. Divestment of certain
business lines and/or products is also likely.
Fitch believes the level of patent expirations will be manageable for
the industry, with approximately 3.6% of global market sales are set to
expire. The U.S. FDA approved 24 novel products in 2013 (as of Nov. 30)
compared to 39 during all of 2012. While 2013 approval numbers are
comparatively weak, Fitch expects 2012-2013 product launches will
upport intermediate- to long-term growth.
Despite the moderate headwinds pressuring profitability and cash flow,
global pharmaceuticals will remain one of the highest-rated industries
in Fitch's portfolio. Issuer credit profiles are supported by strong
liquidity, including superior cash flow generation and large cash
The relatively soft operating forecast increases the likelihood that
some capital allocation decisions could pressure credit profiles and
ratings, specifically selective debt-financed share repurchases.
Fitch anticipates the industry will focus on target, bolt-on
acquisitions during 2014, in addition to marketing and/or development
collaborations of individual therapeutics. Some of these business
development activities could be financed with debt which could also put
stress on leverage metrics and credit profiles.
The full '2014 Outlook: Global Branded Pharmaceuticals' is available at 'www.fitchratings.com'
or by clicking on the above link
Additional information is available on www.fitchratings.com.
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