Moody’s Investor Services has reportedly revised its outlook for the global pharmaceutical industry and upgraded it to stable, apparently anticipating that earnings will rebound in 2013 with the slowdown in patent expirations, characterized by many industry observers as the “patent cliff.” Moody’s had given the industry a negative credit rating since 2007. According to a Moody’s spokesperson, “The stable outlook reflects our view that the worst of the industry’s blockbuster patent expirations has passed. Although industry earnings will still be affected by very recent patent expirations, earnings for large, branded (drugmakers) will reach a trough in late 2012 and rebound in 2013.”

He cautioned, however, that “a difficult regulatory approval environment for new products,” continues to challenge the industry, along with efforts in other countries to contain costs and the increasing use of generic drugs. Spending on brand-name pharmaceuticals is reportedly projected to increase from $596 billion in 2011 to $615 billion in 2016, while global spending on generics is expected to increase from $242 billion to $430 billion by 2016. See Forbes, September 25, 2012.