The value of the global pharmaceutical market is expected to grow 2.5 to 3.5 percent on a constant-dollar basis in 2009--two percentage points lower than indicated in October 2008, as deterioration in the global economic environment continues to affect market demand, according to a report from IMS Health.
The updated forecast predicts global pharmaceutical sales exceeding $750 billion for the year, down from the more than $820 billion forecast in October 2008, reflecting both the lower growth rate and currency exchange fluctuations. The sector will feel the impact of the economic climate--but to a lesser extent than many other industries--through 2010, when a rebound is expected.
"To the now-familiar factors impeding market growth such as patent expirations, a slowdown in innovative product launches, and hurdles imposed by payors on market access and acceptance, we can now overlay the economic downturn," said Murray Aitken, senior vice president of healthcare insight at IMS. "The pharmaceutical industry is not recession-proof, but it is insulated to a greater extent than other industries where spending is more discretionary."
While the pharmaceutical market is expected to rebound as the global economy recovers, an unprecedented level of potential patent expirations in 2011 and 2012 will curb sales growth. The global compound annual growth rate (CAGR) for pharmaceutical market growth is forecast to be 3 to 6 percent through 2013.
In its analysis, IMS identified the following market dynamics:
- Economic conditions affect markets to varying degrees: The extent of the economic impact on each pharmaceutical market is influenced by the healthcare cost burden borne by patients, and the short- and long-term policy responses that governments implement. In aggregate, expectations for 2009 economic growth in the 15 developed and emerging countries have declined by 3.4 percentage points since IMS's October 2008 Market Prognosis Report, driving most of the two percentage point decline in the 2009 forecast since that time.
- The U.S. pharmaceutical market is expected to contract in 2009: Pharmaceutical sales in the U.S. will decline by 1 to 2 percent in 2009, a historic low. While growth will return during parts of the forecast period, the overall five-year CAGR will be essentially flat. Federal policies may bolster demand for medicines over the forecast period, but the expiration of several blockbusters in 2011 will impact growth to the end of the forecast period in 2013.
- Many innovative treatments expected to be launched will be aimed at narrow patient populations. Approximately 50 to 60 new chemical or biological products are expected to be launched over the next two years. About two-thirds of the products will be specialist-driven, and many of them are aimed at niche indications and narrow patient populations. There are between six and 10 potential blockbusters among expected launches in 2009 and 2010.
"The economic crisis is adding another layer of complexity to an already challenging market environment," Aitken said. "To strengthen their resilience, pharmaceutical manufacturers must adapt their strategies and tactics--re-evaluating their commercial models, pursuing opportunities in emerging markets, and strengthening the value proposition of their medicines in ways that resonate with payors and patients."