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Ernst & Young: Big Pharma hunting for 100 billion dollars

The summary of the report Firepower Index (transl. Firepower index), published in the Herald Online and signed by the same Ernst & Young, a global tax and financial advisory firm for large companies, says it clearly: Big Pharma, i.e. the small group of large companies that share the world pharmaceutical market (Pfizer, Bristol-Myers Squibb, Glaxo SmithKline, Sanofi-Aventis, Novartis, Hoffmann-La Roche…), suffers a small setback and, to reduce the negative growth gap and ensure profits for shareholders, will have to focus more on operations merger and acquisitionswith possible employment repercussions.

A process that will put pressure on the historical groups, which would have seen their resources reduced – so to speak – and instead increased competition from specialized pharmaceutical companies and the sector linked to biotechnology. A context of greater competition for the 16 major pharmaceutical companies on the planet (American, European, Japanese): the by now consolidated "flat" trend of sales in the so-called "mature markets" would in fact be added to a slowdown in those in emerging markets. The growth gap between the forecasts of IMS Health (financial analysis company specializing in the sector) for the global drug market and the estimates of analysts say that, according to Ernst & Young, over the next 3 years for Big Pharma there will be about 100 billion dollars of turnover just to keep up with the growth of the world market.

Quite a bummer, considering that Firepower Index claims that the financial capacity of Big Pharma to conduct M&A transactions (i.e mergers and acquisitions, i.e. mergers and acquisitions) decreased by 23% between 2006 and 2012. In the same period, the "financial firepower" of the large biotech competitors increased by 61%, while that of specialized pharmaceutical companies at least by 20%: "As a result of these changes, Big Pharma's share of the combined purchasing power for these three segments dropped from 85% in 2006 to 75% in 2012."

15 January 2013 – values.it

Corrado Fontana

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