Can US pharmaceutical industry survive a pending economic recession?

The US sub-prime mortgage crisis and potential economic recession have roused considerable discussion about which industries will be most affected and which will remain safe. A new report from Global Insight looks at the impact of a potential economic recession on the health care industry, with in-depth analysis of the pharmaceutical sector's performance over the past year. Its key findings are that:

- during the 1990s, the pharmaceutical industry was generally seen as an attractive area for investment. Corporate financial results from fiscal year 2006/07 reveal a murkier picture, with Big Pharma companies susceptible to major losses characterised by weak R&D pipelines, clinical safety litigations and patent losses for top-selling products;

- although the demand for health care may not be greatly affected by an economic recession, the cost of services is likely to increase, forcing payers to seek innovative ways to curb expenditure. A possible result is increased investment in generics, which have the benefit of being volume and price based, therefore satisfying a large market;