Increasing Debt for Pharma Companies

Pharmaceutical Jobs, Pharmaceutical Recruitment, UKAccording to Moody’s Investors Service report, the Pharmaceutical industry debt grew to $270 billion by the end of 2009. This is up $124 billion from 3 years prior, an increase of 117 per cent. This rising debt in the global pharmaceutical industry amid nearing patent expirations puts the industries strong credit profile at risk.

Higher debts means less funds are available for mergers and acquisitions. Not only this, but the pharmaceutical industry faces lower earnings and cash flow prospects due to the patent expiration cliff starting in 2011.

However, it’s not all bad news. According the report, credit metrics for the pharmaceutical industry do still remain favourable compared to other industries. This is due to high profit margins and cash flow. The pharmaceutical industry’s cash flows have also grown in three years, reaching $233 billion as of December 2009.

The pharmaceutical industry still has a strong credit quality, with 20 pharmaceutical companies rated in Moody’s ‘A’ range or higher.

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