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TMCNet:  Fitch: Low Growth but Stable Outlook for Global Pharmaceuticals in 2014

[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)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=725275

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 balances.

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.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


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