To: Haim R. Branisteanu who wrote (87672 ) 3/3/2012 9:19:02 PM From: TobagoJack 1 Recommendation Read Replies (2) | Respond to hello haim, a short and cogent messageFrom: Sent: Subject: The European Federation of Pharmaceutical Industries and Associations noted that European states now owe 12 billion to 15 billion euros to companies such as Roche and Novartis. As of Dec. 31, 2011, the group's combined trade accounts (receivables) from the PIIGS came to 2.1 billion euros (not including zero-coupon bonds issued by Greece in lieu of payments owed.) Faramindustria, the Spanish pharmaceutical industry association, said the Spanish health system owed various vendors $6.3 billion euros as of year-end 2011, up 36% from 2010. Late bills were being paid after an average of 525 days, stretching to 800 days late in certain autonomous regions. Roche quietly reduced its shipments of certain medicines to Greek hospitals in 2011. Novartis is debating whether to change its policies regarding countries with huge unpaid bills. A company spokesperson said, "Deteriorating credit and economic conditions ... have resulted in and may continue to result in requiring us to re-evaluate the collectability of these receivables in future periods. "Pharma companies are private. In a liberal, democratic society, respect for private property is a fundamental value. A firm must maintain a good image for its customers and for the public to ensure it has a marketplace when the crisis is over. It's therefore in its interest to put in place ad hoc strategies like reducing drug prices temporarily. "But the real problem will be if the crisis drags on. Without profit there is no innovation, and without that -- no future." It would appear that most multinational drug companies are sitting on very large, unreserved bad receivables that will need to be converted to actual write-offs in the near future. This could be a significant reason that many of the shares of these same companies have languished for more than a decade, even as their reported earnings have surged.
