Lower pricing flexibility, the stronger U.S. dollar and slower adoption of some new products will dampen earnings growth in the global pharmaceutical industry, said Moody's Investors Service. As a result, the rating agency has changed its outlook on the sector to stable from positive.

"We are changing our outlook for the global pharmaceutical industry to stable from positive because of a modest reduction in our expectations for the industry's earnings growth, said Michael Levesque, a Moody's senior vice president. "We now expect growth of 3% to 4% versus our previous expectation of 4% to 5%."

Moody's noted that pricing in the U.S. was one of the contributing factors to the outlook change. Owing to the continuing debate around high drug prices in the U.S., many manufacturers are taking more modest price increases than in the past.

Pricing remains a headwind in Europe and Japan, where greater generic drug use is encouraged. In addition, the stronger U.S. dollar will hurt large U.S.-based companies with overseas operations, but help non-U.S. drug manufacturers.

Moody's also notes that adoption rates for some products from large pharmaceutical companies have been slower than the agency expected. However, growth remains strong for cancer drugs, especially those in the immuno-oncology category like Bristol-Myers Squibb's (A2 stable) Opdivo and Merck & Co.'s (A1 stable) Keytruda.

Patent expirations for blockbuster drugs will remain modest through late 2017, with the exception of AstraZeneca's (A3 stable) Crestor, whose patent will expire in the U.S. in 2016 and in the EU in 2017.

"Cost savings from acquisitions will also help industry earnings growth," said Levesque."Pharmaceutical companies will remain active in the M&A market as they try to cut costs, achieve greater scale and diversification and acquire pipeline drugs with high potential."