Treating the Recession

For the most part the major pharmaceutical companies have been unaffected by the recession. Certain non-essential drugs and lifestyle drugs can be hurt by the economy. Overall though brand name pharmaceuticals have been extremely resilient to the economic downturn. When something is a necessity it is one of the last things people will stop spending money on. If you literally need a certain drug to survive than you will keep spending the money on it no matter what the economic climate.

Some major brand name pharmaceutical companies managed to make huge gains during the recession. For example Johnson & Johnson had a 10 billion dollar increase in their total assets, mostly caused by a five billion dollar increase in their cash and cash equivalents. Another example is GlaxoSmithKline. GSK had gains of over three billion dollars stemming from an increase in there intangible assets.

Teva Pharmaceuticals, the worlds largest generic drug company, made gains of almost 5 billion dollars in their assets. These gains were largely the result of growth in goodwill and other intangible assets. Their net sales also increased to the tune of more than two billion dollars.

Not all major companies where making large gain during the recession though. AstraZeneca did not have large gains but remained in approximately the same financial condition. AstraZeneca saw their assets decrease by around 50 million dollars. 50 million out of 30 billion is not a significant portion of their assets.

Pfizer and Merck both made outrages gains due to mergers with other large companies. Pfizer’s balance sheet almost doubled in every category from 2008 to 2009 due to their purchase of Wyeth pharmaceuticals. In the case of Merck and their reverse merger with Schering Plough their total assets nearly tripled from 2008 o 2009. At the same time Merck’s total sales increased by almost four billion dollars and Pfizer’s revenue increased by almost two billion.

Pharmaceutical companies are much more worried about the demographic of the population, specifically age, and their patents. Interestingly after the recession, between 2009 and 2010, many of these companies began to lose assets and revenue.

Sources:

http://clients.ibisworld.com.proxyau.wrlc.org/industryus/productsandmarkets.aspx?indid=487&highlight=economy

http://files.shareholder.com/downloads/JNJ/1464725905x0x359541/6EAF4E16-08B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF

http://www.pfizer.com/files/annualreport/2009/financial/financial2009.pdf

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzcxMDk4fENoaWxkSUQ9MzY4MDQ2fFR5cGU9MQ==&t=1