Investors’ views on pharma market

A study by Bloomberg shows that the revenues of the 10 main pharma groups will increase by 2% in 2017. The fastest-growing groups include Pfizer, which will benefit from recently-acquired Medivation, and Teva, which will receive new profits from recently-acquired Allergan’s generics portfolio. Remarkably, the groups globally ranking between 11th and 20th show a 4.5% growth rate, Bayer and AbbVie being the leaders of this cluster. According to the market analysis company Evaluate Pharma, the whole pharmaceutical industry, which generates $800bn globally, will grow at a 6% rate, at least until 2022. Despite such figures, investors are concerned for two reasons: large groups show a reduced ability to innovate and, therefore, to produce new molecules for the market (-20% in Germany vs 2015) and drug prices in the US market—the largest in the world—are under enormous pressure. Paradoxically, investments by big pharma in R&D increased in 2016 to a record $150bn, however, the economic return of R&D programs for pharma is approximately 3.7%, compared with 10% in 2010, Deloitte said. The other great challenge pharma is facing is how to react to the pressure exerted by politics and insurance companies on drug prices in the US. Eli Lilly has already announced it will cut prices by 40% for some insulins and McKesson, expecting a sharp drop in drug prices in the US, has already released a profit warning.
(Source Handelsblatt)