Moody's repeats gloomy view of pharma industry

It's been a grim few weeks for pharma employees. Pfizer ($PFE) disclosed bigger-than-expected job cuts. AstraZeneca ($AZN) chief David Brennan (photo) admitted that his company isn't finished shedding workers. And now, both Roche and Novartis ($NVS) have announced cost-cutting plans. Roche's is expected to claim 4,800 jobs, or about 6 percent of its global staff.

As Dow Jones notes, the Swiss drugmakers' latest news encapsulates the retrenchment pharma has been undergoing in recent years. There's M&A--Roche bought Genentech ($DNA); Novartis snapped up a majority stake in Alcon. And there's cost-cutting, illustrated by the plans announced yesterday. Both strategies are designed to shore up sales as companies face loss of patent protection and pricing pressures around the world.

And now, Moody's Investors Service is adding to the bummer. Moody's reiterated its negative view for the pharma industry, saying that its view "reflects the sector's increasing exposure to major patent expirations, peaking in 2011 and 2012, at a time when the quality of late-stage pipelines is on average insufficient to offset this trend."

What's more, the very buyouts and mergers pharma has turned to for growth could end up further depressing the industry's credit ratings. "Clearly if it's debt-financed, which is typically what we've seen in the industry, this could lead to pressure on ratings," Moody's analyst Marie Fischer-Sabatie told Bloomberg. But stuck between lower ratings and lower sales, we'd bet that pharma will choose the former.

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