Big Pharma, Big Trouble

Pharmaceutical companies are quietly running into problems. The problems are threefold.

Firstly many of them have patents that have run out which means that their dealers now have access to much cheaper generic brands. This hasn’t been a problem in the past as Big Pharma simply invented another new disease and then marketed a new ‘wonder’ drug to cure it. But now the FDA are being forced to actually do something along the lines of their charter. The eyes averted, rubber stamping of new drugs is a thing of the past. Unaccustomed questions are being asked as to efficacy and side-effects.

Secondly, Big Pharma is being slammed in the courts by increasingly angry customers and an increasingly concerned and interested judiciary. The legal fraternity are salivating at the prospect of more class actions along the lines of the tobacco wars of a few years ago. Even the mainstream media is sheepishly and finally admitting that there may be a whiff of impropriety with Big Pharma.

Thirdly, to overcome this diminishment of their cash flow Big Pharma is looking to take over other pharmaceutical companies in a dog eat dog, survival of the fittest exercise. These acquisitions are being financed by debt. Having a lot of debt is no longer as chic as it was a few months ago.

These problems combined means that Big Pharma is about to lose its high credit rating which means that acquiring other pharmaceutical companies, their sole path of survival, is about to become a lot more expensive.

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