US drugmakers are likely to step up their acquisition activities in a bid to find new therapies, and they have the cash to do so, according to a survey by KPMG.
The consultants have polled 100 senior executives in the US pharmaceutical industry and 83% of those surveyed says it is likely their company will be involved in a merger or acquisition as a buyer or seller in the next two years. Some 41% believed the largest area of spending in the next year would be for acquisitions, followed by new products and services, at 38%, and R&D, also at 38%.
A strategic acquisition was cited as the highest priority investment area by 41% of executives surveyed, followed by expansion into new markets by 22%. 58% identified patent expirations of key therapies and generic competition as the top issue facing their company, followed by increasing regulation and enforcement (45%) and lack of new products in the pipeline (34%).
More than three-quarters of executives said their organisations had significant cash on hand and half of them expect to increase capital spending over the next year. More than a third said investment was already underway, while an additional 36% said that spend would be made before the end of the first quarter of 2012.
Asked what single initiative their company's management would spend the most energy on in the next two years, 23% said investing in organic growth, followed by 16% who believe cost reduction initiatives are the priority. Some 16% say improving operation processes and related technology will be the main focus.
When asked about the timing of a full recovery, 31% said by the end of next year, 27% believe it will not happen until the end of 2013, and 27% say at the end of 2014. In terms of headcount, 41% of executives said they plan to add personnel next year, while 23% "never expect hiring to return to pre-recession levels".
"The good news is companies have cash to invest in or acquire new medicine breakthroughs, or markets and customers to drive some growth," said David Blumberg, KPMG national advisory pharmaceutical sector lead partner.