Pharma and biotech industries headed toward era of reduced profit margins

In the face of reduced profit margins for the pharmaceutical and biotechnology sectors, an effective financial management strategy is central to maintain sustainable growth, according to a new report from market research firm Frost & Sullivan.

A new analysis from Frost & Sullivan's Financial Assessment of the Global Pharmaceutical and Biotechnology Industry research evaluates the financials of public companies in the global pharmaceutical and biotechnology industries, and ranks organizations based on their financial and risk management.

The main reasons attributed to declining profitability in the pharmaceutical and biotechnology industries are expiring patents, delayed approvals, the advent of generic versions of drugs, measures to contain health care spending, and the increasing number of participants in the same profit pool. A restricted environment for new product entry, rising prices and lower acceptance of products in newer therapeutic areas will further squeeze profit margins in the long term.