Nearly two-thirds of US senior pharmaceutical executives surveyed by last month foresee a ‘full economic recovery’ by the end of 2013, with more than half of these pointing to an upturn in the industry’s fortunes by the end of next year.
However, 27 percent of the 100 executives interviewed by KPMG for its Industry Pulse Survey suggest that full recovery will not be in pharma’s grasp before the end of 2014, with most expecting ‘just moderate improvements in revenue and hiring’ in the meantime. And, rather disconcertingly, 23 percent “never expect hiring to return to pre-recession levels.”
But if the outlook is cautious for revenue, jobs, and the economy, the KPMG survey results are strongly optimistic on the acquisitions front. A massive 83 percent responded that their company is likely to be involved in a merger or acquisition as a buyer or seller in the next two years, with ’strategic acquisition’ cited as the highest priority investment area by 41 percent of executives surveyed. This was followed by ‘expansion into new markets’, cited by 22 percent.
This mooted “aggressive” growth strategy could suggest that pharma is resorting to its default setting of throwing cash at its problems in an attempt to overcome them. According to the survey, more than three quarters of executives said their organizations had “significant cash on hand”, with half of them expecting to increase capital spending over the next year.
But KPMG claims mergers and acquisitions will be “exceptional forces over the next two years”, and points to the committed pursuit of geographic expansion as a way to spur organic growth.