For several years now, Big Pharma has been scrambling to replace the revenues it's set to lose as blockbuster meds fall off patent. Companies have tried megamergers, licensing deals and generic buyouts. They've targeted a welter of emerging markets for growth. And they've cut costs to retrench in the meantime.
But that hasn't been enough for Moody's Investors Service. According to the Associated Press, the ratings firm issued a negative opinion on the entire industry, saying that drugmaker credit ratings will remain under pressure until 2012. That's because, despite all their efforts, drugmakers still won't be able to make up for all the sales that are headed for that fearsome patent cliff.
Ironically, credit ratings are suffering in part from the very strategies drugmakers are using to boost future sales--namely buyouts. By plowing capital into deals, drugmakers are using up cash that had cushioned their credit ratings, AP notes. Talk about a rock and a hard place.
- read the AP story