2010 Looks Good for European Pharma Sales but Impact of More Patent Expirations Looms
Europe’s recession-resistant pharmaceutical companies are likely to keep expanding their sales in 2010, Standard & Poor’s Ratings Services says in its latest Industry Report Card European Pharmaceuticals Have The Right Formula To Keep Growing In 2010. However, Europe’s pharma companies face a longer term negative impact from patent expirations.
European pharmaceutical companies’ efficient research and development (R&D) is translating into a promising list of newly approved drugs, S&p said. Rated pharmaceutical companies have received approval for about 19 new drugs over the past two to three years.
“Standard & Poor’s further estimates that eight rated European pharmaceutical firms have about 80 new molecular entities in Phase III, the last–stage of the pipeline before being granted regulatory approval. We believe this has been supported by strong R&D spending. Over the past three years, Merck (MRK) , Roche Holding AG (RO), and Novartis AG (NOVN) have all exceeded the 18% average R&D spending by global pharmaceuticals.”
In third-quarter 2009, the swine-flu pandemic also boosted sales for companies that produce vaccines–mainly sanofi-aventis S.A. (SAN) and AstraZeneca PLC. (AZN). We believe their sales, as well as those of GlaxoSmithKline PLC (GSK) and Novartis will continue to benefit from flu vaccine sales over the next two quarters, S&P said.
European companies are also benefiting from a recovery in the U.S. pharmaceutical market, its most important export destination, in third-quarter 2009, the report states. This follows a slower growth phase in the U.S. during 2008, caused by an unprecedented wave of patent expirations on blockbuster drugs (meaning those with annual sales of more than $1 billion), price
increases in early 2009, and a more-pronounced-than-expected restocking of inventory levels at pharmacy and wholesale levels.
Among the top European pharmaceutical companies, S&P notes there are at least 13 blockbuster drugs scheduled for patent expiration over the next three years either in Europe, the U.S. or both regions.
The total sales impact on individual companies could be up to $4.2 billion for AstraZeneca, which will experience expirations on three large drugs in 2009 and 2011, S&P says.
“Our total sales-loss estimates are, however, worst-case scenarios, assuming complete loss of a drug’s revenue after patent expiry. The actual impact on sales would, however, depend on many factors, such as the number of new contenders to produce generic versions of the off-patent drug, the drug’s size, the country of patent expiry, as well as the drug’s complexity.”
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