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.
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!