Credit Suisse predicts major European drugmakers will report 4 percent salesgrowth and 6 percent earnings per shares (EPS) growth this year, with companiessuch as Bayer and Novartis seen outperforming the market.
It expects that Roche will also do well.
"EU Pharma benefitted from a valuation re-rating during 2013. We believethis can continue if R&D productivity continues to improve and new drug launcheshave successful trajectories during 2014," Credit Suisse says in a note.
Drug categories such as cancer, respiratory, diabetes, cholesterol andhaemophilia are likely to be in focus during 2014, it says, adding that priceinflation remains a positive in the U.S. market but the patent expiry benefit iseasing.
"EU healthcare reforms will likely ease but not disappear. The net impact isneutral as the industry should also benefit from a reduction in the mandatoryrebate in Germany. Following a tough year in emerging markets, we expectcompanies should benefit from a recovery in China and bounce back fromcompany-specific shocks."
However, Credit Suisse is cautious on AstraZeneca andGlaxoSmithKline, saying both the companies are likely to underperformthis year.
"AstraZeneca faces mounting operating costs and GSK will continue to rely ontax and share buybacks to offset minimal EBIT growth and strong FX headwinds."
Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net
Astrazeneca (AZN)
Glaxosmithkline (GSK)
