- Moody's has downgraded its growth forecast for the pharma industry, citing lower price flexibility, and slow product adoption. The sector is now rated "stable," instead of "positive."
- The credit-risk agency now expects industry growth of 3% to 4%, down from a previous range of 4% to 5%.
- Industry M&A activity will help growth through cost-savings and replenishing pipelines, Moody's said.
Lower price increases in the U.S., partly due to the heightened debate over high drug pricers, will impact growth going forward, according to the credit agency. Pricing will also be a factor in Europe and Japan, but more due to the impact of greater generic drug volume.
Interestingly, Moody's highlighted the impact of slower-than-expected adoption rates for some products. While it did not specify, some new-entry specialty drugs such as Sanofi/Regeneron's Praluent have disappointed out of the gate. Increasingly, payers are using the maximum amount of time allotted for product review ahead of making formulary decisions.
Novartis's pharmaceuticals head recently attributed the slow uptake of its heart med Entresto on evaluation delays by Medicare and private insurers.
The rating update expects growth for cancer drugs to remain strong, however.