STOCKS NEWS EUROPE-Major drugmakers to post 4 pct sales growth-CS

Mon Jan 20, 2014 4:35am EST

Credit Suisse predicts major European drugmakers will report 4 percent sales growth and 6 percent earnings per shares (EPS) growth this year, with companies such 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 believe this can continue if R&D productivity continues to improve and new drug launches have successful trajectories during 2014," Credit Suisse says in a note.

Drug categories such as cancer, respiratory, diabetes, cholesterol and haemophilia are likely to be in focus during 2014, it says, adding that price inflation remains a positive in the U.S. market but the patent expiry benefit is easing.

"EU healthcare reforms will likely ease but not disappear. The net impact is neutral as the industry should also benefit from a reduction in the mandatory rebate in Germany. Following a tough year in emerging markets, we expect companies should benefit from a recovery in China and bounce back from company-specific shocks."

However, Credit Suisse is cautious on AstraZeneca and GlaxoSmithKline, saying both the companies are likely to underperform this year.

"AstraZeneca faces mounting operating costs and GSK will continue to rely on tax and share buybacks to offset minimal EBIT growth and strong FX headwinds."

Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net

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