Zacks Industry Outlook Highlights: Merck, Pfizer, Forest Laboratories, Sanofi and Eli Lilly

Zacks Industry Outlook Highlights: Merck, Pfizer, Forest Laboratories, Sanofi
                                and Eli Lilly

PR Newswire

CHICAGO, Dec. 4, 2013

CHICAGO, Dec. 4, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Pharma/Biotech, including Merck (NYSE:MRK-Free Report), Pfizer
(NYSE:PFE-Free Report), Forest Laboratories (NYSE:FRX-Free Report), Sanofi
(NYSE:SNY-Free Report) and Eli Lilly (NYSE:LLY-Free Report).


Industry: Pharma/Biotech


With 2013 coming to an end, the worst of the patent cliff faced by the
pharmaceutical sector is over. Major blockbuster drugs like Merck's
(NYSE:MRK-Free Report) Singulair, Pfizer's (NYSE:PFE-Free Report) Lipitor,
Forest Laboratories' (NYSE:FRX-Free Report) Lexapro, Sanofi/Bristol-Myers'
(NYSE:SNY-Free Report) Plavix and Eli Lilly's (NYSE:LLY-Free Report) Zyprexa
representing combined branded sales worth more than $15 billion in lost patent
protection over the last couple of years.

However, the effect of the genericization of these products was felt mostly in
2012. While the industry won't be completely free from genericization, the
major patent expiries are over and done with.

Several companies which had been struggling to post growth in the face of
genericization over the past few years should see accelerated growth in 2014.
New products should start contributing significantly to results and increased
pipeline visibility and appropriate utilization of cash should increase
confidence in the sector.

Collaborations, Acquisitions and Restructuring

The pharma sector witnessed major merger and acquisitions (M&A) activity over
the last couple of years. The trend continued this year and going forward, we
expect small bolt-on acquisitions to continue. In-licensing activities and
collaborations for the development of pipeline candidates have also increased
significantly. Several pharma companies are focusing on in-licensing
mid-to-late stage pipeline candidates that look promising, instead of
developing a product from scratch, which involves a lot of funds and time.

Small biotech companies are open to in-licensing activities and
collaborations. Most of these companies find it challenging to raise cash,
thereby making it difficult for them to survive and continue with the
development of promising pipeline candidates. Therefore, it makes sense for
them to seek deals with pharma companies that are sitting on huge piles of

We recommend biotech stocks that have attractive pipeline candidates or
technology that can be used for the development of novel therapeutics.
Therapeutic areas which could see a lot of in-licensing activity include
oncology, central nervous system disorders, diabetes and
immunology/inflammation. The hepatitis C virus (HCV) market is also attracting
a lot of attention.

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