U.S. pharma in a blue Moody over bad credit

Moody's Investors Service says U.S. drug manufacturers can expect to see their credit ratings drop over the next year, despite respectable cash flow and decent profitability. Companies such as Schering-Plough, J&J, Genentech and Pfizer were major debt drivers, according to Moody's semi-annual report. The report looked at the ability to pay debts in addition to the often-mentioned issues of patent expirations, generic competition and regulatory challenges. 

The report cites concerns about increasing levels of offshore cash by the companies, which held $58 billion in the U.S. and $27 billion offshore in 2006, but increased offshore holdings to $63 billion in 2007, with just $29 billion in the U.S. that year. Couple this with an increasing debt level from $75 billion to $94 billion in the same time-frame and the pharma industry's usually strong credit rating is likely to fall.

- read the WSJ piece
- check the report from Forbes