The coming changes in the German pharma market are not quite as dour as the article you posted makes them sound. About 25% of the German pharma market is already being handled through government tenders, and this portion of the market will not undergo any changes.
Bayer AG on Thursday became the latest drug giant to launch a restructuring program to offset falling revenues caused by generic drug competition and medicine price pressures from health-care reforms imposed by indebted governments.
The German pharmaceuticals and chemicals conglomerate late Thursday said it will cut costs by €800 million ($1.09 billion) a year starting in 2013 and slash 4,500 jobs, while creating some 2,500 new positions largely in emerging markets,
Bundling existing resources and streamlining structures is "the only way we can sustainably finance our investment in growth and innovation—for example in new pharmaceutical products, in our BioScience business and in the expansion of our capacities in Asia," Marijn Dekkers, chief executive of the Leverkusen-based company said in a statement.
The company left its guidance for the current financial year unchanged, however. Last month, Bayer said it expects 2010 adjusted sales growth of more than 5%, and earnings before interest, taxes, depreciation and amortization before special items above €7 billion.
Bayer said it will take one-time charges of around €1 billion by the end of 2012, of which some €200 million will be booked in this year's fourth quarter. Of the €800 million in projected annual cost savings, around half will be reinvested, Bayer said.
The group will now focus on research, developing and marketing new products, particularly in its HealthCare and CropScience divisions.
Bayer's revamp mirrors similar action this week by Roche Holding AG and Novartis AG. The two Swiss drug giants Wednesday launched their own cost-cutting programs and sweeping job cuts to secure long-term profitability.
Other Big Pharma companies have also engaged in money saving reorganizations, cutting costs and refocusing their R&D engines in hopes of offsetting the loss of patent protection for key drugs.
Moody's Investors Service Wednesday reiterated a negative outlook on the pharma sector, citing looming patent expirations and government health-care reforms which will hurt drug makers' profitability.
Germany's lower house of parliament last week approved rules to curb the power of pharmaceutical companies to set prices in Europe's largest pharmaceutical market. The reforms there are forecast to cost the industry around €2 billion a year [#msg-56730192]. The health-care reform bill must now pass the upper house of parliament, or Bundesrat. A vote is scheduled for Nov. 26.‹
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