This post from WSJ via PharmaGossip. It chronicles the problems popping up in Big Pharma now that we're on top of that nasty patent cliff - which turns out to be real afterall.
PharmaGossip: A Fork in the Road for Pharmaceuticals - WSJ.com.
The article outlines various approaches Big Pharma appears to be using to deal with the revenue gap and still deliver good EPS numbers for its shareholders. These include:
- Cost-cutting, usually R&D, Sales & Marketing or both - didn't need them anyway
- Selling non-core businesses - like diagnostics (Ed. Note Wonder what will happen when companion diagnostics become all the rage in next couple years)
- Stock-buy backs - you can increase the numerator or decrease the denominator to boost EPS
- Buy another company's revenues, i.e. acquisition - usually at a high price for acquirer's shareholders
- Enter another business like vaccines or consumer health products
So what's an investor to do when evaluating the wisdom of these choices? I notice actually introducing innovative drugs to meet clear medical need is conspicuously missing from the above list - but I digress.
I can only pass on the advice of one of my favorite St. Louis philosphers - one Lawrence "Yogi" Berra. When you come to a fork in the road? Take it!
Posted by Bruce Lehr Feb 2nd 2011.
nice......!
Posted by: seema | 08/01/2011 at 06:51 AM
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Posted by: rohini | 06/22/2011 at 07:29 AM
Thanks for sharing this information..
Posted by: Michael Villanueva | 04/18/2011 at 08:26 AM
Innovation in a big company is not easy. All the paper works and management approval before you can make a move. So the pharma loaded cash just said, "fork it, I will buy it."
Posted by: Fai | 02/02/2011 at 09:19 PM