A third of pharmaceutical industry CEOs are very confident that they can increase their companies' revenues through upcoming years, according to a PricewaterhouseCoopers 12th annual CEO survey (http://www.napsronline.org). 

The survey of 47 pharmaceutical CEOs across the globe reveals that the credit crunch may actually provide new prospects for many large pharmaceutical companies, particularly those with low debt proportions and strong cash situations.

Compared to chief executives interviewed from other industries, pharmaceutical 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.

“Pharmaceutical CEOs will have to make tough decisions about what actions are required to ensure their company's future growth and successful operating models. Historically, external economic forces have impacted the pharmaceutical sector less than other manufacturing areas, and this year pharmaceutical CEOs are notably more confident about short-term growth than their peers. However some drug pipelines require CEO's to look hard at their cost base and business structures” said Simon Friend, Global Pharmaceutical and Life Sciences Leader at PricewaterhouseCoopers.

"The economic downturn has created a potentially beneficial environment for large pharmaceutical 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 pharmaceutical and biotech,” Friend noted.

 

Keeping Positive

Over 55% of pharmaceutical CEOs believe that the structural adjustments facing the industry's business model will have a constructive impact over the long term. "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 and faster,” stated Fred Hassan, Chairman and CEO of Schering-Plough Corporation.

Continuing merger activity looks likely, with pharmaceutical companies using their healthy cash balances to fund acquisitions. Pharmaceutical 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.

By Chris Navarro
Get Pharmaceutical Sales Jobs, Contributing Editor