CHICAGO, March 3, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Pharmaceuticals Industry, including Abbott Labs (NYSE : ABT), Allergan Inc. (NYSE : AGN), Pfizer (NYSE : PFE) and Biogen Idec (Nasdaq : BIIB).
A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/48376/Pharmaceutical+Industry+Outlook+-+March+2011.
The pharmaceutical industry continues to witness major challenges like sluggish prescription trends, EU pricing pressure, intensifying generic competition, pipeline failures and limited late-stage catalysts. The next five years are expected to reflect a significant imbalance between new product introductions and patent losses.
According to IMS Health, this is the main reason global pharmaceutical market growth will be restricted to the mid-single digits (5-8%) through 2014. Over the next five years, products that currently generate more than $142 billion in sales are expected to face generic competition, including Lipitor, Plavix and Zyprexa.
In fact, 2011 itself will see products worth more than $30 billion losing patent protection. This includes products like Lipitor, Plavix, Zyprexa and Levaquin. These products generated more than $15 billion in sales in 2010. The effect of the genericization of these products will be felt mostly in 2012, which will be a challenging year for several companies.
At the same time, new products are not expected to generate the same level of sales as products losing patent protection. With revenue growth stalling or slowing down, companies have been resorting to cost-cutting and share buybacks to drive bottom-line growth.
We currently have a neutral outlook on large-cap pharma stocks, supported by the Zacks #3 Rank. While the companies will continue to face challenges like pricing pressure and genericization, growth in emerging markets and product approvals could help reduce the impact.
Most of the companies have provided a disappointing outlook for 2011 with performance expected to be affected by factors like US healthcare reform, EU pricing austerity, and generic competition among others.
We currently have Neutral recommendations on companies like Abbott Labs (NYSE : ABT), Allergan Inc. (NYSE : AGN) and Pfizer (NYSE : PFE). We believe that Allergan's presence across different segments and geographies will help maintain decent growth going forward. We believe the company will be back on its historical mid-to-high teens earnings growth trajectory from 2011.
In the biotech space, we are positive on Biogen Idec (Nasdaq : BIIB). Biogen delivered a strong fourth quarter with revenues being driven by Tysabri and Avonex. Earnings estimates for Biogen have gone up significantly for 2011 based on continued strong performance of the multiple sclerosis franchise and share repurchase.
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