FT.com (02/05/12) Jack, Andrew
Many pharmaceutical companies in Europe are altering their business practices in response to uncertainty over outstanding payments and future income. The scale of exposure has not been disclosed, but unpaid debts for the healthcare sector are estimated at more than 12 billion euros. Multinational groups tend to have relatively modest exposure to troubled areas like Portugal, Italy, Greece, and Spain; smaller and regional companies, however, are experiencing a more material burden. The industry is receiving more and more restructuring pressures from bad debts, gloomy prospects, and further cuts in drug prices and volumes. Some companies are seeking buyers, and others are attempting to diversify into new regions or drugs. Other efforts include factoring to generate immediate cash, seeking loans from secured banks, and taking back unpaid receivables. Some companies are also trying to switch customers away from hospitals that depend on regional government budgets to individual pharmacies, but this policy is more difficult for companies that supply more costly, life-saving products that may only be prescribed by specialists in hospitals.

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