The Merck plant at Ballydine, County Tipperary

In a report published Tuesday, titled Reflections On US Big Pharma: Fourth Quarter 2008 Review, Standard & Poor's Ratings Services said that 2008 was a challenging year for the US pharmaceutical giants, with major blockbuster drugs continuing to lose patent  protection, global economic uncertainty, seemingly lengthening approval  processes at the Food and Drug Administration (FDA), and unfavorable currency trends. Meanwhile, as a result of the worldwide recession, there are reports of patients delaying or forgoing filling prescriptions, and governments worldwide are increasingly incorporating generic drugs into health care plans to reduce costs.

US pharmaceutical firms are responsible for almost half of Ireland's merchandise exports.

Merck, which last week announced a merger with Schering-Plough, in a $46 billion cash-and-stock deal that follows just weeks after Big Pharma's biggest firm Pfizer,  announced plans to team up with Wyeth, said on Tuesday, that it plans to add 300 jobs at its Carlow plant as part of a €20 million investment.

Also on Tuesday, it was disclosed, that Elan partner Biogen Idec, may have found a treatment for the deadly brain infections that have been tied to use of its multiple sclerosis drug Tysabri, the biotech  companies fastest-growing product.

Analysts said the drugmaker may discuss its Tysabri safety efforts at a meeting today with investors to present its latest drug research.

A malaria pill developed during the Vietnam War is being tested by Biogen on patients with progressive, multifocal leukoencephalopathy, the brain disorder known as PML, said Al Sandrock, Biogen's head of neurology research.

"Pharmaceutical companies continue to merge in order to capture synergy opportunities and diversify their product portfolios while they await new  major products from their combined product pipelines," said Standard & Poor's credit analyst David Lugg.

S&P said this year has already seen two big transactions. 'AAA' rated Pfizer, facing a late 2011 patent expiration on the world's best selling drug, Lipitor, and a pipeline that has not been especially productive, agreed to buy Wyeth for what the ratings agency consider to be an eye-opening $68  billion. Merck & Co. (AA-/Positive/A-1+) quickly followed with its March  2009 announcement that it was acquiring Schering-Plough Corp. (A-/Watch Pos/A-2) for $46 billion.

"The proposed health care reforms by the US government are expected to  be a mixed bag for the pharmaceutical industry," Lugg added.

Reforms with positive implications include more insurance coverage leading to higher demand for drugs, continued research and development tax credits, and provisions for more incentives and funding for research. However, possible reforms such as increased rebates for drugs sold to US state Medicaid programs, comparative effectiveness studies on high-cost prescription drugs, and a regulatory pathway for follow-on biologic drugs are expected to squeeze the high margins of the pharmaceutical companies.