Updated on 24 December 2012
With negotiations on, nobody wanted to jump the gun and reach a conclusion. However, both the industry and the analysts are keeping a close watch on the political developments. No end is, however, in sight before the year-end as the political leaders remained divided on the measures to take while the Christmas holidays inched closer.
PricewaterhouseCoopers (PwC) US Public Relations did not want to comment to avoid speculating on the outcome. "We are working with companies to plan and prepare for various outcomes and scenarios that make the most sense for their businesses," stated the email response. PwC is a global professional services firm.
Another multinational pharmaceutical company with headquarters in the US, Pfizer, said: "We believe that it's critical that Congress and the president (Mr Barack Obama) find a balanced approach to solving our nation's fiscal challenges. We will continue adapting to meet the needs of patients, payers, governments, and society as a whole — consistent with our principles of increasing patient access to novel medicines and protecting our industry's ability to continue innovating. We have long maintained that the relationship between the industry and the government-funded scientific research is symbiotic, which is why we believe that adequate funding for the NIH is critical for the health of our nation."
Ms Jennifer Brice of Frost & Sullivan points out the industry on its part is hoping for an early resolution of the situation. "We have seen a surge in the number of lobbyists from big pharma companies urging government officials to resolve the fiscal cliff. However, now that the elections are over, it is expected that there will be a one year extension on the fiscal cliff with minimal impact to healthcare since healthcare reform will remain," she says.
In the face of the looming crisis, ratings agency Standards & Poor says the pharmaceutical industry will record a fairly low growth rate of one percent to three percent in 2013. While according to the agency's statement released to the media, the generics industry will record a double digit growth at the cost of branded generics, thanks to the patent cliff, pricing flexibility will remain for the drug manufacturers. "We've been thinking for 20 years that the U.S. government could impose broad price controls," said Ms Lucy Patricola, credit analyst with S&P. "But at this point, our 2013 expectations assume a continuation of historical trends and good pricing flexibility in the US."
If spending cuts in healthcare kick off, the situation is likely to be a boon for the generic players - many of them Asian companies — in the market. How far will this effect innovation and emerging companies seeking funds in the bioscience industry remains to be seen.