More gloom expected from pharmaceutical companies

Last week, investors disposed of their pharmaceutical shares following disappointing sales or outlooks from Forest Laboratories, Pfizer and Roche.

Furthermore, a relatively good set of results from Abbott Laboratories failed to excite the market.

According to analysts, there is more gloom expected in the industry as earnings are expected to fall at GlaxoSmithKline, the world’s second largest pharmaceutical company, as it has experienced a fall in demand for its Avandia diabetes pill.

The declines in the industry have originated due to fears about growing generic competition, major research problems for particular drugs and fears of a tougher US regulatory and political climate.

Analyst, Paul Diggle, of Nomura Code Securities said it’s the start of what looks like a pretty bloody pharma results season.

The American Stock Exchange Pharmaceutical index .DRG, which comprises largely of US and European drug makers, has fallen by approximately 12% this year, underperforming broader indexes.

Other pharmaceutical companies including Eli Lilly, Merck & Co, Novartis, Schering-Plough and Wyeth are all due to report this week.

Profits at Merck, Novartis and Wyeth are expected to suffer due to competition from cheap generics.

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