people aged 65 and over suffer from a chronic ailment that is likely to be treatable with medication.
However, the pharmaceuticals market is undergoing a major transformation. Pharmaceutical groups are seeking to adapt to a new market environment marked by soaring demand for generics as generic manufacturers are benefiting from the mass expiry of patents on blockbuster drugs. The concerns of big pharma groups are also partly related to challenges in the domain of Research & Development (R&D). This trend is explained by the fourfold increase in the cost price of developing a new drug over the past 15 years and much more rigorous approval criteria by healthcare agencies.
In Europe the sector currently faces real challenges. Besides additional regulatory hurdles and R&D escalating costs, the sector has been severely hit by the impact of fiscal austerity measures introduced by governments across much of Europe in 2010 and in 2011.
The Euler Hermes Global Pharmaceuticals Report concludes that the golden age of very high profitability for big pharma groups appears to be over. Although average operating margins should remain high at 20.5 percent in 2012, this represents a drop of 2.5 points from 2011 and 4 points from 2006. European pharma groups, whose margins are set to exceed those of their US counterparts by 5 points in 2012 (operating margins are forecast to average 18 percent in the US in 2012, compared with 22.5 percent in Europe), are proving more resilient. This is partly because the US giants are more affected by patent expiries and the repercussions of strong industry concentration. Of the 105,000 jobs axed in the pharmaceutical industry over the period 2009-2011, three-quarters were in the US. In contrast, US biotechnology companies, which are better financed than their European peers, are in fine health. Generic manufacturers are also in excellent financial health, with margins forecast to grow by 6 percent in 2012.
Globally, however, there is rapid growth in the pharmaceuticals market and improvements in the research environment in emerging economies such as Brazil, China and India, leading to a degree of migration research activities to these fast- growing markets. The Euler Hermes Global Pharmaceuticals Report notes that it is the emerging markets that will fuel the expected 4 percent growth in the pharmaceutical market overall in 2012.
Financial Services
The turmoil in the financial services industry shows few signs of abating. The worst dangers of the financial crisis have given way to political and regulatory reaction on perhaps an unprecedented scale. But major uncertainties remain.
Given the ongoing fragility of the financial and economic environment in many parts of the world, financial sector firms face an unprecedented combination
Reed Exhibitions | EIBTM Trends Watch Report 2012 8
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