Pharma stock may be something of a safe haven for investors battered by the yo-yo markets, but as the turmoil continues to leak from Wall Street to Main Street, drugmakers themselves may suffer. In fact, cash-strapped Americans are already cutting back on healthcare. That's big news, because healthcare has historically been seen as a port for every recessionary storm.
Scrips fell by 0.5 percent during the first quarter, year-over-year, and almost 2 percent during the second. The first negative quarters in more than a decade, according to IMS Health. Plus, 11 percent of consumers surveyed by the National Association of Insurance Commissioners said they've cut back on prescription drugs to save money. They're also cutting back on elective surgeries such as hip and knee replacements--and along with them, all the anesthesia meds, painkillers, antibiotics, and other meds they'd be given in the hospital.
People are skipping pills, postponing refills, and switching to cheaper alternatives to their current meds. Will the trend continue long enough to make a big dent in Big Pharma's bottom line? Your reading of the economic tea leaves is probably as good or better than ours.
- read the Wall Street Journal story