By Lewis Krauskopf and Ben Hirschler
NEW YORK (Reuters) - A new era is fast approaching for the healthcare industry.
The debate on overhauling the U.S. health system is reaching a fever pitch on Capitol Hill. Within months, efforts may be enacted that will broaden health insurance coverage and lead to new competition, fees and other significant changes that shake up the critical U.S. market.
"It has the potential to really radically redefine the most important market for the majority of healthcare industries," Morningstar analyst Damien Conover said.
Drugmakers are simultaneously confronting the biggest loss of patent protection in history, depriving them of exclusivity on some of the world's most famous and profitable medicines.
Faced with losing billions of dollars in revenue to an increasingly important generics sector, the world's leading drug companies are striking major deals, diversifying and cutting costs.
Yet investors are not convinced they have found the path to sustained profits beyond the patent cliff.
Pharmaceutical stocks worldwide have underperformed the broader market in 2009 and are now trading at a 23 percent forward price-to-earnings discount to the wider market.
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For a graphic showing forward P/Es for pharma stocks, click on: here
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CHALLENGES
Leaders of many of the world's largest drug groups -- Pfizer (PFE.N: Quote, Profile, Research, Stock Buzz), GlaxoSmithKline (GSK.L: Quote, Profile, Research, Stock Buzz), AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz), Merck (MRK.N: Quote, Profile, Research, Stock Buzz), Eli Lilly (LLY.N: Quote, Profile, Research, Stock Buzz), Novartis (NOVN.VX: Quote, Profile, Research, Stock Buzz) and Novo Nordisk (NOVOb.CO: Quote, Profile, Research, Stock Buzz) -- will try to answer that market skepticism and address the industry's challenges at the Reuters Health Summit in New York from November 9 to 12.
The specter of a massive health overhaul has also clouded the prospects of health insurance companies. The chiefs of WellPoint (WLP.N: Quote, Profile, Research, Stock Buzz) and Humana (HUM.N: Quote, Profile, Research, Stock Buzz) will be on hand at the summit to offer their outlooks on the future of managed care.
Other guests include the top executives at Edwards Lifesciences (EW.N: Quote, Profile, Research, Stock Buzz), Beckman Coulter (BEC.N: Quote, Profile, Research, Stock Buzz) and Tenet Healthcare (THC.N: Quote, Profile, Research, Stock Buzz), whose industries face changes from reform and have been pressured by the weak economy, and the commissioner of the U.S. Food and Drug Administration.
Recently, there have been some glimmers of hope that research labs are starting to come up with more winners again, after a barren few years. Continued...
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