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Drugmakers Singing Same Song: 2012 Will Be Tough

LINDA A. JOHNSON

For drugmakers, the golden era of the 1990s and early part of the last decade, when they seemed to effortlessly churn out new multibillion-dollar pills for the masses along with double-digit quarterly profit increases, is not even in the rearview mirror any more.

Buzzwords such as "blockbuster" and "cash cow" have all but disappeared. The new vocabulary stresses "headwinds," ''austerity" and "efficiency." The "Do More with Less" mantra of many industries is basically on steroids in the pharmaceutical business, where most companies have shed 10 percent to 20 percent of their workforce and closed numerous factories and offices or sold them â¿¿ if they could find a buyer.

Amid these challenges, the major drugmakers have been reading from the same script in reporting mediocre year-end results and trying to brace investors for a difficult 2012.

Almost unanimously, company executives say revenue will be flat or down this year due to a mix of generic competition, pricing pressures in the European Union and now some key emerging markets, unfavorable currency exchange rates and research setbacks or manufacturing problems.

And they're all trying to soothe investors with promises of more share buybacks and dividend hikes, plans to heavily market their newest drugs and hopes for new approvals or encouraging data on medicines now in testing.

"If you didn't know what company you were listening to, they were all sounding the same" on the fourth-quarter conference calls, said Edward Jones analyst Linda Bannister. "They have good balance sheets, good cash flow (but) these companies are all struggling with the same issues."

Some of the pressures on the industry are beyond its control, such as the lingering global recession, penny-pinching by millions of unemployed people and belt-tightening by government health programs in the many countries overwhelmed with debt.

Other wounds are self-inflicted, particularly the many drug and medical device recalls that have cut into sales and raised scrutiny by regulators and quality concerns among patients.

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