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Home > Healthcare > Pharmaceutical > General Pharmaceutical
United States Pharmaceuticals and Healthcare Report Q4 2008
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The US has the largest and most advanced pharmaceutical market in the world. In 2007, pharmaceuticalexpenditure stood at US$307.7bn. Despite continuing fears for the US economy, due to the impact of thecredit crunch and the housing slump, spending should continue to grow, as pharmaceuticals areconsidered an essential item. In 2008, though, BMI expects expenditure to retract slightly in real terms,because of high inflation in the economy. However, over the rest of the forecast period growth shouldremain comfortably above inflation, with the market reaching a value of US$388.9bn by 2012.Indeed, the recent financial results posted by Pfizer and Wyeth have highlighted the beneficial effect of aweakened US dollar to US drugmakers with a global presence. Favourable currency exchange ratesboosted Pfizer's Q208 revenue by 7%, or approximately US$800mn. Meanwhile, Wyeth has revealed thatif it excluded the effect of strengthening foreign currencies, sales for the quarter would have increased byonly 1%, compared to the 5% growth seen in the unadjusted figures. It is BMI's view that thisphenomenon will continue through to the end of 2008, and then reverse next year.
Thia quarter has also been busy in terms of merger and acquisition activity. In July, in a deal that couldblow the rest of 2008's pharmaceutical acquisitions out of the water, Swiss drugmaker Roche offered tobuy the remaining shares US biotechnology giant Genentech for US$43.7bn. Roche - which currentlyowns a majority 55.9% share in the US firm - offered US$89 per share, an 8.8% premium on closingprice. Not to be outdone by its research-focused rivals, Israel's Teva Pharmaceutical Industries hasonce again demonstrated its desire to expand by acquisition, launching a US$7.46bn bid for US-basedgenerics firm Barr Pharmaceuticals in July 2008.
Meanwhile, with the Presedential election looming and both candidates promising reform, the healthsector could be set for seismic change. Democrat candidate Barack Obama's policy focuses on universalcoverage through government and employers. Republican John McCain emphasises market reforms tomake health insurance affordable, while at the same time demanding greater individual responsibility.However, BMI warns believe that there is little room for further GDP-beating health expenditure growth,given that spending on healthcare reached 16% of GDP in 2006. Indeed, with per-capita expenditure ofUS$1,022.6 per year, the US remains the dominant pharmaceutical market in the world and remains itsplace at the top of BMI’s Business Environment Rankings both regionally and globally.
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