On the road to ruin or recovery?
With the global economy languishing in the depths of recession, it was obvious that the UK Budget at the end of April was never going to provide any quick fixes.
With the global economy languishing in the depths of recession, it was obvious that the UK Budget at the end of April was never going to provide any quick fixes.
Although the chemical sector professed itself pleased with the announcement of a £750m package to support emerging technologies and high tech manufacturing, this still fell short of the £1bn that the biotech industry had been hoping for. And although the Budget contained a proposal to look at the UK tax system to see if changes are needed to encourage innovation, this will do nothing immediately to stem the flow of projects to other countries in Europe where r&d tax credits are already a reality.
This could well be a missed opportunity that the UK industry will live to regret. Innovation is one of the keys to boosting economic growth and generating employment, and once the r&d jobs have been outsourced to other countries it will be almost impossible to win them back.
The Chemical Industries Association (CIA) welcomed the support for new high-tech industries such as biosciences, but it expressed disappointment that, unlike the UK's competitors in Europe, the Government was "failing to take any action to protect skills in the high tech chemical industry that underpins these new sectors". As CIA chief executive Steve Elliott pointed out, countries that invest in the essential technical skills of their workforce during the recession will have a competitive advantage over the UK as global trade picks up.
If the flurry of m&a activity since the beginning of the year is anything to go by, the global pharma industry is intent on putting its house in order ready for the eventual upturn. The three mega-deals in the first quarter of the year have already exceeded in value the whole of fiscal 2008. And there could yet be several further large deals on the horizon as other major players find themselves losing ground to the new alliances.
But some of the most significant players have declared themselves not interested in major acquisitions, preferring to stick to what Bristol-Myers Squibb terms a "string of pearls" strategy.
Whether or not there is any upturn in 2009, one thing is certain: the Big Pharma top ten will look quite different by the end of the year.