Blog #3: Current Events in the Pharmaceutical Industry

A recent Wall Street Journal article provides information on an "patent cliff" that is sweeping through the pharmaceutical industry. This article talks primarily about the effects of this patent cliff on three companies: AstraZeneca, Novartis, and Sanofi. The article says that "the patent-expiration predicament has been worsened by broader economic problems that have resulted in deep price cuts from health-care customers in Europe and the growth of cheaper generic products. The third quarter is expected to be tough for all three of these Big Pharma companies. Analysts are predicting severe revenue declines from each of these companies (Hodgson 2012).

One of the companies in our industry group, AstraZeneca, is largely mentioned in this article. According to Hodgson, AstraZeneca is expected to lose patent protection on 50% of its revenue in the next five years. Additionally, AstraZeneca has made no attempt as of yet to to come up with replacement drugs or diversify in order to up their revenue sales. AstraZeneca's revenue is expected to decline by 18% in the next three months. The chief executive, David Brennan, actually resigned earlier this year because of the company's patent expiration problem and executive pay. Furthermore, their shares dipped sharply as they are now trading 2.8% lower that the beginning of the year (Hodgson 2012).

This is very interesting because AstraZeneca is an assigned company in my industry group. This article gives a lot of proof as to why we should not, as a group, recommend AstraZeneca as our company to invest in. Through the research given in this article, it is clear that AstraZeneca is not doing well at all. Their revenue sales are plummeting a lot even in three short months. The fact that they are expected to lose their patent protection on 50% of their revenue in the next five years is astonishing (Hodgson 2012). Our group should definitely keep this in mind when thinking about who to recommend investing in. AstraZeneca is not doing very well and is not predicted to do any better in the upcoming years. This is definitely important information that we got from this article.

The overall impact of this event on my industry is that the pharmaceutical industry seems to be going down a little bit. This article talks about three of the biggest pharmaceutical companies in the industry and how they are all doing poorly. The patent cliff is obviously severely impacting the pharmaceutical industry. It is kind of scary that the top companies in the industry are struggling in this way.

Works Cited

 

Hodgson, Jessica (24 Oct. 2012). Big Pharma Tries to Look Past 'Patent Cliff'. Retrieved from

       http://online.wsj.com/article/SB10001424052970203897404578076173187345806.html?        

       KEYWORDS=pharmaceuticals