NEW YORK--()--Fitch Ratings forecasts low single-digit growth for most companies in the U.S. healthcare sector in 2013, despite a dynamic operating environment.
Fitch's overall credit outlook for the U.S. healthcare 2013 is stable. This encompasses issuers in the branded and generic pharmaceutical manufacturer, diagnostic and life science, healthcare provider, medical device, and healthcare services segments of the U.S. healthcare industry.
Factors supporting growth generally across the industry include the aging population and higher rates of chronic disease, growing demand in emerging markets and new product launches. These positive trends are tempered by weaker economic conditions in developed markets and the U.S. fiscal cliff, which could result in lower payments to the industry.
There will be significantly better visibility on the effects of the Affordable Care Act by mid-2013. While Fitch views the ACA as a positive driver on the industry's operating outlook in 2014, the magnitude of its effect will depend on many current unknowns.
Furthermore, healthcare entitlement reforms will be central to any U.S. deficit reduction plans in 2013. These reforms have the potential to threaten future healthcare industry profitability.
Most companies in the Fitch-rated portfolio are generating cash well in excess of reinvestment requirements despite a weak operating environment. Fitch believes companies could increase spending on M&A, dividend and share repurchases later in 2013, pending clarity on U.S. deficit reduction measures and the stabilizing Eurozone situation.
The full '2013 Outlook: U.S. Healthcare' is available at 'www.fitchratings.com.' Specific outlooks and trends for each of the aforementioned industry segments are provided in the report.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: 2013 Outlook: U.S. Healthcare -- Navigating a Dynamic Operating and Regulatory Environment