Pharma struggles to adapt as patents expire

By Lewis Krauskopf

NEW YORK (Reuters) - New threats to drug makers' revenues are rising even as the industry maneuvers to plug huge holes from looming patent expirations.

A newly elected U.S. administration under President-elect Barack Obama brings concerns over pricing and further potential scrutiny, at a time when drug companies have already faced increased uncertainty from the regulators of their products.

And although investors traditionally see the drug industry as insulated from rocky economic times, there are signs the global turmoil is taking its toll and forcing consumers to cut back on their medicines.

These issues arise as drug companies near a brutal period when many of their blockbuster products will lose patents and see sales eroded by generic rivals. Meanwhile, the industry has spent billions on research with insufficient return.

To some, the industry's struggles demand drastic change.

"We would not be buyers of the sector at current levels until we see signs that managements are beginning to take bold action to control their destiny," Jami Rubin, a U.S. pharmaceuticals analyst for Goldman Sachs, said in a recent research report.

Leaders of many of the world's top pharmaceutical companies -- including Pfizer Inc (PFE.N: Quote, Profile, Research), Merck & Co (MRK.N: Quote, Profile, Research), AstraZeneca (AZN.L: Quote, Profile, Research), Bayer AG BAYG.DE and Daiichi Sankyo (4568.T: Quote, Profile, Research) -- will address these challenges this week at the Reuters Health Summit in New York.

Others guests from the biotech and specialty pharmaceutical industries include Gilead Sciences Inc (GILD.O: Quote, Profile, Research), Amgen Inc (AMGN.O: Quote, Profile, Research), Shire Plc (SHP.L: Quote, Profile, Research), and Elan Corp (ELN.I: Quote, Profile, Research), as well as chief executive officers of top health insurers WellPoint Inc (WLP.N: Quote, Profile, Research) and Aetna Inc (AET.N: Quote, Profile, Research), which face their own set of challenges with a new U.S. political landscape.