Austerity in Europe Puts Pressure on Drug Companies

Profits at pharmaceutical companies have been declining or showing little growth for the last year as austerity measures across Europe lead to cuts in health care spending. Some analysts say this trend could continue until at least 2014.

Budget cuts mean that many European governments are not willing to pay as much for pills. But new laws in some countries are also putting pressure on companies to prove their drugs are effective or risk having them dropped from the coverage list, or covered at a lower rate.

And price reductions in Europe can have a ripple effect. Profits from sales in emerging markets may also fall, because governments in emerging markets refer to the prices set in Europe to determine their own.

That would particularly hurt European pharmaceutical companies, which have been quite successful in emerging markets in the last five years. American companies, by contrast, do not rely as much on overseas revenue because of their large domestic market…

Source: nytimes.com

via Austerity in Europe Puts Pressure on Drug Companies – NYTimes.com.