Big Pharma Performance Before, During and Beyond the Global Recession

Date: November 1, 2009
Pages: 75
Price:
US$ 7,600.00
Publisher: Datamonitor
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: BAAE04CA749EN
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Big Pharma Performance Before, During and Beyond the Global Recession
Introduction

This report assesses the performance of the leading 15 pharmaceutical companies up to, during and beyond the recent global recession. It places the pharma sector in the context of other major industry sectors and analyzes the internal dynamics behind pharmaceutical companies' performance.

Scope

*Cross-sector sales analysis before, during and beyond the global recession

*Assessment of high- and low-growth sectors of the prescription pharmaceuticals market

*Discussion of pharma's possible responses to slowing pharma sales growth rates

*Ranking of the top 15 pharma companies over 2005 to 2014

Highlights

The pharma landscape is being reshaped by expiries. This trend has already begun with expiries wiping -3.7 percentage points off the sector's 200508 sales growth rate, turning pharma into one of the slower-growing industry sectors.

The recession has provided some respite for pharma, giving it a stock market boost as it lived up to its defensive reputation and stood as the only sector to achieve positive sales growth. Nevertheless, this only masked the continual expiry-driven decline of pharma sales growth rates.

Between 2009 and 2014, the expiry burden will reach a tipping point, sending year-on-year pharma sales growth rates negative in 2012 and 2013. If pharma is to avoid a continuation of the 200508 stock market revaluation of its worth, it must take action.

Reasons to Purchase

*Assess pharma's sales and stock market performance in relation to other major industry sectors

*Evaluate the strategic shifts within the prescription pharmaceutical market and identify the high- and low-growth sectors of the industry

*Quantify the historical and forecast impact of generics on pharma's sales growth rate
ABOUT DATAMONITOR HEALTHCARE

About the PharmaVitae team

CHAPTER 1 INTRODUCTION

Structure: past, present and future analysis
Cross-sector analysis
Pharma analysis
Data sources
Ex-pharma data
Pharma data
PharmaVitae Explorer database
Re-creating analysis from this report using PharmaVitae Explorer queries
Further reading
Methodology

CHAPTER 2 EXECUTIVE SUMMARY

Key findings
Insulated from the wider economy, pharma recorded the highest growth of any sector during the recession, but this masked the continuing decline of sales growth rates as expiries take their toll
Expiries will shape pharma's corporate landscape...
...as the division between high- and low-growth molecule type/therapy area sectors widens
Pharma must reposition, diversify and cut costs to maintain stock market performance...
Reposition: licensing, restructuring and acquisitions improve biologics, vaccines and rest of world presence
Diversify: acquisitions build presence in other sectors
Cut costs: restructuring and using acquisitions to achieve economies of scale
...or ready itself to a return to the historic trend of market underperformance
Company rankings, 2005-08, Q208-Q209, 2009-14 and post-M&A 2009-14
Table of Contents
Table of figures

CHAPTER 3 PHARMA PAST - PRE-RECESSION ANALYSIS, 2005-08

Key findings
Cross-sector analysis
Pharma's growth rate has fallen from double-digit figures to below the cross-sector average
Leading up to the recession, pharma has underperformed the S&P 500
Expiries have already begun to take their toll on pharma
In an expiry-less world, pharma's 2005-08 sales CAGR would have stood at 10.2%
Pharma analysis
The uneven burden of expiries determines company-by-company performances
Combining molecule type with therapy area identifies high- and slowing-growth areas of the industry...
...and goes some way to explaining different company performances
Exchange rates have helped dollar-reporting pharma companies' performance
Acquisitions have driven some companies' sales growth
Adjusting for exchange rate fluctuations and M&A alters the pharma landscape
Company rankings

CHAPTER 4 PHARMA PRESENT - RECESSION ANALYSIS, Q208-Q209

Key findings
Cross-sector analysis
Pharma was the only sector to record positive sales growth during the worst of the recession
Correspondingly, it has outperformed the wider stock market...
However, within pharma's bubble, the narrative of expiries eroding year-on-year sales growth rates continues
...in an expiry-less world, its performance relative to other sectors would have been even more impressive
Pharma analysis
Expiries have continued to shape company performances
A significant strengthening of the dollar has benefitted euro- and sterling-reporting companies...
There has been relatively little completed M&A activity
Company rankings

CHAPTER 5 PHARMA FUTURE - POST-RECESSION ANALYSIS, 2009-14

Key findings
Pharma analysis
The patent cliff will drag year-on-year growth into negative territory during 2012 and 2013, before recovering to positive, if marginal, growth in 2014
Dragged down by expiries, six companies are forecast negative 2009-14 growth
The benefits of being in a 'high-growth' sector are significant
Company rankings
Pharma must resort to rest of world expansion, diversification, cost-cutting and M&A to bolster its performance
Move out of low-growth commoditized markets and into high-growth biologics and vaccines
With traditional markets slowing, rest of world expansion looks attractive
Contributions from ex-Pharma business units can come at a cost
Cost-cutting will make a significant contribution to operating profit growth
Mergers can contribute sales growth, cost-cutting opportunities and diversification
Except in the event of a double-dip recession, pharma is expected to return to underperforming the market

CHAPTER 6 APPENDIX

Cross-sector data
Supporting data
Methodology
Expiry-less growth rates
M&A adjustment
Exchange rate adjustment
Molecule type by therapy area market segmentation
References
News articles
Data sources
Abbreviations
Exchange rates
About Datamonitor
About Datamonitor Healthcare
Datamonitor consulting
Disclaimer

LIST OF TABLES

Table 1: Cross-sector coverage
Table 2: Pharma sector coverage
Table 3: Pharma sales by lifecycle stage ($bn), 2009-14
Table 4: Pharma company sales growth ($m) by lifecycle stage, 2009-14
Table 5: Pharma company rankings, prescription pharmaceutical sales ($m), 2005-08
Table 6: Pharma company rankings, prescription pharmaceutical sales ($m), Q208-Q209
Table 7: Blockbuster product* patent expiries, 2009-14
Table 8: Pharma company rankings, prescription pharmaceutical sales ($m), 2009-14
Table 9: Post-M&A pharma company rankings, prescription pharmaceutical sales ($m), 2009-14
Table 10: Sector sales ($bn), 2005-08
Table 11: Sector sales ($bn), Q208-Q209
Table 12: Lipitor sales forecast ($m), unadjusted and expiry-less, 2008-09
Table 13: Bayer sales ($m), with and without M&A, 2005-08
Table 14: Sales growth ($bn) by molecule type vs. therapy area segment, 2002-05
Table 15: Sales growth ($bn) by molecule type vs. therapy area segment, 2005-08
Table 16: Sales growth ($bn) by molecule type vs. therapy area segment, 2009-14
Table 17: Exchange rates, 2009

LIST OF FIGURES

Figure 1: Seasonally-adjusted US GDP growth rate, at annual rates (%), Q105-Q309
Figure 2: The PharmaVitae Explorer
Figure 3: Pharma market capitalization vs. S&P 500 (rebased), July 2005 to September 2009
Figure 4: Pharma sales growth rate (unadjusted and expiry-less) vs. the cross-sector average (%), 2005-14
Figure 5: Pharma sales growth by lifecycle stage ($bn), 2009-14
Figure 6: Company sales growth by lifecycle stage, percentage of 2009 sales (%), 2009-14
Figure 7: Molecule type vs. therapy area sector growth map, 2009-14
Figure 8: Strategic focus and growth rate by company, 2009-14
Figure 9: Strategic responses to falling sales and operating profit growth
Figure 10: Effects of acquisitions on Pfizer, Merck & Co. and Abbott's strategic focus and growth rate by company, 2009-14
Figure 11: Abbott-Solvay growth by geography (% of 2009 combined sales), 2009-14
Figure 12: Company growth rates, CAGR (%), prescription pharmaceuticals vs. other business units, 2009-14
Figure 13: Pfizer-Wyeth growth by business unit (% of 2009 combined sales), 2009-14
Figure 14: Operating profit growth ($bn), sales vs. operating margin, 2009-14
Figure 15: Pharma market capitalization vs. S&P 500 (rebased), July 2009 to September 2009
Figure 16: Company rankings by prescription pharmaceutical sales, 2005-08, Q208-Q209, 2009-14 and post-M&A 2009-14
Figure 17: Sector-by-sector sales growth rate, CAGR (%), 2005-08
Figure 18: Market capitalization growth rate (%), pharma vs. S&P 500, 2005-08
Figure 19: Pharma sales growth rate (%), reported and expiry-less, 2005-08
Figure 20: Sector-by-sector sales growth rate, CAGR (%), pharma unadjusted and expiry-less, 2005-08
Figure 21: Company sales performance by lifecycle stage, percent of 2005 annual sales (%),2005-08
Figure 22: Molecule type vs. therapy area sector growth map, 2005-08
Figure 23: Companies on the molecule type vs. therapy area sector growth map, 2005-08
Figure 24: Company sales growth rate, CAGR (%), 2005-08
Figure 25: USD vs. EUR, GBP, CHF and JPY (rebased), 2005 to H1 2008
Figure 26: Company growth rates, CAGR (%), adjusted for exchange rates and M&A, 2005-08
Figure 27: Strategic focus and growth rate (XR- and M&A-adjusted) by company, 2005-08
Figure 28: Sector sales growth (%), Q208-Q209
Figure 29: Pharma market capitalization vs. S&P 500 (rebased), Q208-Q209
Figure 30: Pharma sales growth rate (%), reported and expiry-less, 2005-Q209
Figure 31: Sector sales growth (%), pharma unadjusted and expiry-less, Q208-Q209
Figure 32: Company growth by lifecycle stage, percentage of 2008 sales (%), 2008-09
Figure 33: USD vs. EUR, GBP, CHF and JPY (rebased), Q208-Q209
Figure 34: Company sales growth, CAGR (%), exchange rate- and M&A-adjusted, Q208-Q209
Figure 35: Pharma sales growth rate (%), reported and expiry-less, 2009-14
Figure 36: Company growth by lifecycle stage, percentage of 2009 sales (%), 2009-14
Figure 37: Molecule type vs. therapy area sector growth map, 2009-14
Figure 38: Strategic focus and growth rate by company, 2009-14
Figure 39: Company growth rates, CAGR (%), 2009-14
Figure 40: Effects of acquisitions on Pfizer, Merck & Co. and Abbott's strategic focus and growth rate by company, 2009-14
Figure 41: Seven major market (7MM) sales vs. rest of world (RoW) ($m), 2005-14
Figure 42: Company growth rates, CAGR (%), prescription pharmaceuticals vs. other business units, 2009-14
Figure 43: Operating profit growth ($bn), sales vs. operating margin, 2009-14
Figure 44: Merger growth rates, CAGR (%), PFE-WYE, MRK-SGP and ABT-SOLV, 2009-14
Figure 45: Pharma market capitalization vs. S&P 500 (rebased), July 2009 to September 2009
Figure 46: Chicago Board Options Exchange's volatility index, 2005-09
Figure 47: Trade-weighted dollar index, 2002-09
Figure 48: Crude oil price*, dollars per barrel, 2001-09

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