Wednesday, March 25, 2009

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Why are drug companies hyperventilating

Few weeks back if you noticed pharma companies were in merger takeover talks companies like wyeth & Pfizer , roche & genentech, people were exteremely excited to listen to these drug companies playing capitalism capitalism in times of utter chaos in financial sector. Few anchors of CNBC were pretty excited to see that American credentials of being free fair and capitalist nation exist, as if trying to defend the faltered economy. However there is a genuine reason behind these mergers and

and take overs for example pfizer accordint to a report in 40% of the pfizer 18 billion dollar revenue generating drugs are going to looose their patents in next 4 years these drugs include some of the famous ones like Caduet, Geodon, Viagra, and Xalatan between now and the end of 2012.Merck, will see 32% revenue of 2009 of its drug getting wiped of it balance sheet which includes medicines like Singular and Cozaar GSK has 4% revenue exposed, J&J has 6% exposed between 2011 and 2012.
Hence these companies are in takeover and merging mood, how can a company afford to tell its customers that sorry our 25% revenues are now 0% in 2012, so its a great time to short these companies, unless of course the merger proves inverse, but definately 2011 and 2012 will be the year pharma companies will have to forsee costcutting and increase in research spending, this would mean increase in outsourcing to 3rd world countries lab tests conducted on Indian subcontinent or Africa so lets gear up for watching collapse or say crack in wall of great pharma industries. But the Generic drug companies are here to make profit from these drugs especially drugs like viagra would definately have lot of takers on it so keep long options for some generic drug manufacturers, those in finance or credit business need to increase their credit riskiness of these companies and downgrade their credit rating unless they generate some break through durg like lipitor....

This is great time for a newbie generic drug manufacturer to approach pfizer merck or any other company to buyout their complete plants and place sales royalty turnkey business model.

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