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Can Big Pharma sustain a swelling rate of new drug approvals?

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Reuters' Ben Hirschler today paints an optimistic portrait of the rising number of new drug approvals and applications in Europe as well as the U.S., with European regulators expecting a healthy 54 new drug applications in 2013 as the FDA wraps a year in which 34 new approvals have already been handed out.

The pharma industry's woeful rate of new drug approvals over much of the past decade has made this metric one of the most important in the industry. It raises the crucial question of whether developers can effectively invest tens of billions of dollars in R&D every year as major blockbusters tumble over the patent cliff and big markets are ripped apart by cheap generic competition. And some analysts give this trend toward rising approvals a cautious thumbs-up.

"It shows that companies are addressing the need to find new drugs to replace those facing patent expiration," Standard & Poor's (S&P) analyst Olaf Toelke tells the veteran pharma scribe Hirschler. "They have done their homework and it looks as if the industry will be at least stable in future and not fall off the threatened patent cliff."

But at best the new approvals this year will only marginally outpace the performance over last year. With decisions on four more drugs due by the end of the year at the FDA, the U.S. still has two more OKs to go before it matches last year's NDA score. And there are plenty of big pharma companies--including such notables as Eli Lilly ($LLY)--that are far off the pace they promised several years ago.

One factor in their favor, from an investor's perspective, is that more of these approvals are coming for biologics, which have an extended period of market exclusivity to look forward to.

- here's the story from Reuters

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