Eurozone fears have drugmakers re-strategizing

As European bond sales falter and negotiations go down to the wire, drugmakers are among the companies preparing for the worst. As Reuters reports, businesses of all stripes are weighing scenarios--including the worst-case prospect of a eurozone breakup. They're moving assets to the "safest" banks, reviewing their 2012 budgets for the region, buying U.S. Treasury bills, and stepping up their currency-hedging efforts.

But it's more than moving money around. Contracts weren't written with a euro collapse in mind; some might need replacing. The sort of slow-to-no-payment issues drugmakers have already seen in cash-strapped countries--particularly Greece, although Spain has also been a problem--could spread. Drugmakers who've gritted their teeth and accepted Greek bonds as payment may get more discounted bonds rather than actual cash. And although some companies have cut off certain Greek customers, denying drugs to a wide range of healthcare providers would make Big Pharma look like the Big Bad Wolf.

AstraZeneca ($AZN) is among those moving cash to safe havens and buying T-bills, Reuters says. Merck ($MRK) warned shareholders that European cutbacks could further undermine its pricing power. And Danish diabetes specialist Novo Nordisk is wondering how a collapse in the euro would affect pricing for two potential new products. "[W]e need to think through how our pricing strategy would fare if there were suddenly a dismantling of the euro," CFO Jesper Brandgaard told Reuters. "How do we avoid falling into a trap? This is the first time I've asked such a question. It's a topic that is increasingly on the radar."

- see the Reuters analysis

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