For quite some time now the major American pharmaceutical companies have been benefitting from the foreign exchange rate.
Besides cost-cutting, the weak dollar has been propping up revenue and profits during a time when the sector is battling intense competition from much cheaper generic drugs, safety and regulatory issues, drug development pipeline challenges and disappointments, etc.
But given the recent strength in the greenback, Deutsche Bank analyst Barbara Ryan says the sector may not be able to rely on forex for very much longer.
On Tuesday, she put out a research note to clients entitled, "When does the tailwind become a headwind?" Ryan believes that if current trends hold up, then the exchange rate upside will go down the rest of this year and may go away next year.
But she thinks that the industry's ongoing expense reductions could absorb the dollar's potential impact on the bottom line. Ryan says the biggest beneficiaries of the weak dollar have been Schering-Plough and Pfizer, because they sell a bigger percentage of their drugs overseas than their competitors.
And speaking of Pfizer, I may have spoken too soon yesterday about PFE shares leaving the teens: The stock couldn't hang on and closed below 20. I'm guessing technical analysts might be able to dissect what's going on. If you've got a logical explanation, please send it here.
Anyway, today PFE has touched the 20-dollar level again -- but is struggling to stay there.
Questions? Comments? Pharma@cnbc.com