A health care analysts' forum consisting of Goldman Sachs analysts inthe USA and Europe, covering various aspects of the global health care industry, has concluded that: - the health care sector will continue to experience a healthy pace of consolidation; - the US government budget overhang is getting clearer and reducing investor uncertainty; - the regulatory environment is currently relatively friendly for pharmaceutical and device companies; - biotechnology fundamentals are intact but continue to call for caution and selectivity; - managed care pricing is improving and enrollment is growing; - hospitals continue to reduce costs; and - long-term care companies are refocusing their core business.
In the USA, the fundamentals for pharmaceutical companies have never been brighter. The analysts believe that earnings growth can be sustained at 15%-16%, on average, through the end of the decade, driven by unit volume growth, new product rollouts, continued active consolidation and a relatively friendly regulatory environment. They say that issues to focus on are pricing, currency, patent expiration and valuation.
In the US biotechnology sector, innovation is still a major part of the industry, involving many cutting-edge technologies in life sciences for the pharmaceutical industry. Maykin Ho, GS' US biotechnology analyst, sees alliances between biotechnology and big pharma continuing, with the biotech companies fulfilling the role of the R&D arm of the drug industry. She notes that many biotechnology firms are still one-product businesses, which results in considerable volatility in the stock price, making selectivity important.
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