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Trends So Far in Big Pharma's Fourth Quarter

We're seeing cost cutting, conservative forecasts, and slow new drug launches.

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With approximately half of the large pharmaceutical firms' fourth-quarter results in the books, we have seen three themes emerge: continued cost cutting, conservative 2010 outlooks, and slow product uptake for newly launched drugs. We expect these themes to continue when  Pfizer (PFE),  GlaxoSmithKline (GSK),  Merck (MRK), and  Sanofi-Aventis (SNY) report in February.

With the exception of  AstraZeneca (AZN), the fourth quarter brought more of the cost cutting that occurred in 2009. We expect further cost cutting from the remaining drug companies that have yet to report results, with Merck and Pfizer likely to lead the pack in magnitude of cuts. Also, while Glaxo needs to adapt to its patent losses by trimming costs, the company appears to be one of the less aggressive cost-cutting companies--a pattern we expect to see continue with its fourth-quarter results.

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.