Moody's predicts a stable outlook for the pharmaceutical industry for the next year or so, even as it battles a number of headwinds.

First, the headwinds.

The drug industry, for example, is fighting back on drug pricing negotiations with Medicare. And some of the largest companies are facing pressure on their pipelines with patents expiring for some major brands in the next few years.

Moody's senior vice president for investor services, Michael Levesque, said as much Thursday.

"Pressure points will rise in 2025 and beyond, including a steeper patent cliff, drug pricing changes in the US Inflation Reduction Act, and proposed changes to European drug regulations," he wrote in a note to investors.

But Medicare and patents aren't the only battles. Pushback from the US Federal Trade Commission is another hurdle for the industry. One recent example is the FTC's efforts, joined by several states, to stop Amgen's (AMGN) potential $28 billion acquisition of Horizon Therapeutics.

That is a problem for an industry flush with cash, eager to engage in M&A that would help thwart Medicare efforts to control pricing. At last tally, in December 2022, the 15 largest investment-grade issuers were sitting on $164 billion, Levesque said.

But there's optimism too: Blockbuster drug sales and the hot new obesity drug market will help drive earnings growth.

"Rising sales of...drugs treating cancer, autoimmune diseases, and diabetes/obesity will drive 2-4% earnings growth," Levesque said.

Another bright spot, albeit smaller, is the uptick in COVID vaccines for the fall and winter, which will mostly benefit Pfizer (PFE), he said.

"We could change our outlook to positive if we expect annual EBITDA growth above 4% over a future 12-18 months period. This could occur if there are material new product launches in under-treated diseases, if the impact of patent exposures declines, or if treatments or vaccines for COVID-19 see rising rather than weakening demand," Levesque wrote.