The season to be jolly?

Janus, the Roman god who gave his name to this month, is depicted with two faces. This is not due to his duplicitous nature, but rather to the tendency at this time of year to look back over the past 12 months and to consider what the next 12 might bring.

For the majority of companies involved in the pharmaceutical sector, 2005 is probably best forgotten, but there are some signs that the New Year may bring some respite from the industry's current woes.

The business outlook was a topic addressed by several of the speakers at last month's European Fine Chemicals Conference. Marc Hennebert, of Strategic Decisions Group, summed up the situation as a crisis driven by declining demand, overcapacity and increasing competition. But there were now two distinct tiers of industry players: survivors and strugglers.

The pharmaceutical industry, he suggested, could evolve in one of two very different ways: either a descent into commodity or triumphing through innovation. Faced with this uncertainty, fine chemicals companies need to remain disciplined and focused.

The one certain thing is that future growth will be closely linked to an increasing focus on r&d. So there was good news for the UK pharma industry in the Chancellor's pre-budget statement in December, when a number of measures were announced to boost investment in the UK healthcare sector, support science and innovation and promote the development of new technologies and more efficient ways of working.

The importance of the UK's IP framework in present and future success was also recognised, and its performance is to be reviewed with a view to making targeted and practical recommendations for improving the system. This review will look, among other things, at the complexity and expense of the copyright and patent system, including licensing arrangements, litigation and enforcement.

The government is also planning to build a world-class environment for medical research and development and to boost regional centres of scientific excellence - a model already used successfully in the US and France.

Perhaps the biggest unknown factor for the coming year will be the degree of penetration in Europe by Asian and Indian suppliers - visitors to recent exhibitions will be in no doubt of their growing influence in the market. According to Hennebert, they should be regarded as a resource rather than a threat - but that is probably easier to say than to do.

There are signs of optimism on the horizon. Let's just hope it's not another false dawn.