2015 Outlook: Global Pharmaceuticals (Strategic Industry Evolution to Continue; M&A Reduces Rating Headroom)

...Corporate Activity Drives Rating Outlook: Fitch expects rating headroom to remain under pressure in the global pharmaceutical sector, as the industry adjusts its business models and positions itself for anticipated growth. 28% of the Fitch-rated global pharma universe have been assigned a Negative Outlook (Amgen, BMS, Merck, Bayer) and there was one downgrade in the sector during 2014 (AstraZeneca). The key driver for rating actions has been corporate activity focusing on increasing scale in selected therapeutic areas and consumer healthcare, divestment of legacy drug portfolios, R&D productivity to manage the increasing costs and risks of bringing new drugs to market, and tax benefits. Stable Underlying Industry Drivers: The stable sector outlook reflects underlying growth from an ageing and growing world population leading towards an increase in chronic and lifestyle diseases, emerging-market investments in healthcare, and treatment and technology advances. These are offset, however,...

Outlook