What's worrying pharma? Reimbursement, yes, but also M&A, global threats, and the economy

Print 25 June 2015
Tracy Staton / Fierce Pharma

If you've spent any time reading biopharma's securities filings, you've noticed the litany of potential problems every company discloses--everything from natural disasters and terrorist attacks to patent lawsuits and regulatory setbacks.

The consultants at BDO take a regular look at these disclosures, eyeing them for industrywide patterns and changes. And in this year's report, the firm noted a few big leaps in the numbers. Given the trends in the industry these days, they're anxieties that aren't too surprising.

Almost every drugmaker listed worries about reimbursement for their products, up 11 percentage points over the previous year. That put payers near the top of the list of industry concerns, just behind product liability risks.

Then there's the M&A wave, which has swept through biopharma over the past few years. Every quarter seems to bring more deals than the last, and that apparently has companies worried: 83% of them cited fears that they'd be unable to complete pending deals or manage their dealmaking. That's up from just 69% in 2014. With so many pending deals out there, a proliferation in this sort of cover-your-rear disclosure only makes sense.

Worries about the economy also grew, with 91% of companies citing market conditions as a potential drain on their businesses. Obviously, the slowdown in Europe and emerging markets has put a damper on sales growth, and the strong dollar and Swiss franc took a toll on Q1 numbers for a number of global drugmakers.

Meanwhile, threats to international operations and sales have pharma execs more worried these days, too, with fears about the former rising 17 percentage points to 88%. Consider the corruption crackdown in China, which took a major bite out of pharma's sales there, for one reason why. And as BDO notes, companies have been expanding internationally as they cast about for growth, and that means more of their sales derive from far-flung markets.

But the biggest jump came in worries about the workforce. More than three-fourths of the surveyed companies--78% to be exact--cited labor concerns in their public filings this year. That's up from just 40% in 2014 and 24% in 2013. And no wonder: Their worries range from retirement and benefit costs to retaining and managing their international employees, another consequence of the industry's international push.

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