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It looks like 2008 is shaping up to be a difficult year for the industry. In addition to broader issues like the credit squeeze, the housing slump and the continuous rise in gas prices, the industry is faced with some “perfect storm” issues of its own.

The FDA approved 19 new drugs in 2007, the fewest since 1983, according to Bloomberg. Congress has encouraged FDA to develop programs that allow for more strict oversight on drug safety which can delay approvals going forward and result in more black-box warnings. In 2008 there will be $12 billion worth of branded drugs losing patent protection. Anticipated generic substitution for these brands is only part of the story. History tells us there is a tendency for therapeutic substitution, weakening the class of drugs when generics become available. Prescription price increases are not sustainable, and this impacts new product sales and compliance with existing therapies.

Taking all these factors into consideration, IMS estimates that pharma revenues will increase 5%-6% in 2008, the lowest increase in decades.

The lone exception to this continued media meltdown is the Internet advertising component which appears to be in the eye of the storm. Internet advertising is projected to grow to as much as 30%. Much of this growth will come from TV. Furthermore, a recent study by Simmons found that consumers are 26% more engaged in the content of TV programs they watch online. TiVo is also impacting the way people watch TV. For those without TiVo, shows are often available for viewing online, further fragmenting the TV audience.

These trends suggest that a good portion of budgets will migrate to the web as advertisers look for ways to reach their target audiences in a more accountable medium.

Dan McKillen is president of the NewsDay news service

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