third of pharmaceutical industry CEOs are very
confident that they can increase their companies'
revenues over the next 12 months, according to
PricewaterhouseCoopers 12th annual CEO survey.
The survey of 47 pharma CEOs around the world
indicates that the credit crunch may actually
provide opportunities for many large pharma companies,
particularly those with low debt ratios and strong
Compared to over a thousand
CEOs interviewed in other industry sectors, pharma
CEOs are more confident and less concerned about
the disruption of capital markets than their peers
are, less likely to state that recent problems
in the global banking system will delay investment
plans, and more likely to be using internally
generated cash flow as a means of financing growth.
Continuing merger activity
looks likely, with pharma companies using their
healthy cash balances to fund acquisitions. Pharma
CEOs are more likely than their peers in other
industry sectors to be planning a cross-border
merger or acquisition in the next 12 months.
Simon Friend, global pharmaceutical
and life sciences leader, PricewaterhouseCoopers,
commented: Pharma CEOs will have to make
tough decisions about what actions are required
to ensure their companys future growth and
successful operating models. Historically, external
economic forces have impacted the pharmaceutical
sector less than other manufacturing areas, and
this year pharma CEOs are notably more confident
about short-term growth than their peers. However
weak pipelines require CEO's to look hard at their
cost base and business structures.
The economic downturn
has created a potentially beneficial environment
for large pharma companies wanting to expand and
build on their R&D base. For instance in the
current climate, with the yen rising against the
US dollar and the euro, Japanese companies are
potentially well placed to go on a buying spree
for US and European pharma and biotech.
Despite challenges such
as the downturn, over-regulation and low-cost
competition, 55% of pharmaceutical CEOs believe
that the structural changes facing the industry's
business model will have a positive impact over
the long term.
Fred Hassan, Chairman &
CEO of Schering-Plough Corporation, suggests that
the economic downturn might provide an extra stimulus
to innovate. "If we keep thinking short-term,
we will not be able to deal with some of the structural
challenges that need to be dealt with. In other
words, tough times can make one innovate harder