CHICAGO--(BUSINESS WIRE)--

Fitch Ratings today published 'Navigating the Drug Channel - Pharmaceutical Manufacturers: At the Source,' the second of seven reports analyzing the U.S. drug channel. This newest report focuses on headwinds and tailwinds faced by drug makers, as well as their role in the U.S. drug channel and Fitch's take on certain considerations on the horizon.

Drug makers are plagued by unprecedented and now-accelerating drug patent expirations, which will continue through 2015. Fitch believes the impact of the so-called 'patent cliff' apply to each pharma manufacturer on an individual basis, with issuers such as Bristol-Myers Squibb Co.; Eli Lilly & Co., Inc.; and Pfizer Inc. most affected.

The industry's R&D pipelines were productive in 2011, positioning several drug makers to benefit from a solid recovery of a portion of lost revenues and profits; albeit delayed from the greatest impact of patent expiries. Due to their position at the beginning of the drug channel, pharmaceutical manufacturers' productivity is directly related to the longer-term viability of the channel as a whole.

Labor conditions in the U.S. are not expected to materially improve over the next few years, likely leading to continued treatment avoidance and a further pressuring of prescription drug trends. Nevertheless, Fitch expects the effects from an aging U.S. population and the expansion of Medicaid coverage in 2014 from the Patient Protection and Affordable Care Act to backstop the dampening effect on overall prescription demand from prolonged poor macroeconomic conditions.

Fitch believes that stubbornly high unemployment, constrained third-party reimbursement growth, and very large drug patent expiries will clash with favorable demographic trends and an anticipated one-time addition of about 30 million potential new patients to result in annual U.S. drug spending growth of 3% or less over the next couple of years.

Considerations on the horizon include the introduction of biosimilars into the U.S. drug channel, the rapid growth of specialty pharmaceuticals, and the growing importance of pharmacogenomics. The report discusses Fitch's take on each of these very vital issues.

The full report, 'Navigating the Drug Channel - Pharmaceutical Manufacturers: At the Source,' is available at 'www.fitchratings.com.' This is the second in a series of seven reports that Fitch will publish during the first half of 2012. The expected schedule for future reports can be found on the first page of previously published reports, including this one.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Navigating the Drug Channel Pharmaceutical Manufacturers: At the Source

More:
Fitch: Drug Makers Continue to Face Challenges at the Beginning of the Drug Channel