The value of the global pharmaceutical market in 2010, driven by stronger near-term growth in the U.S. market, is expected to grow 4-6 percent on a constant-dollar basis, exceeding $825 billion, according to report from market research firm IMS Health.
The report predicted global pharmaceutical market sales to grow at a 4 to 7 percent compound annual growth rate through 2013, and took into account the impact of the global macroeconomy, the changing mix of innovative and mature products and the rising influence of healthcare access and funding on market demand.
Global pharmaceutical market value is expected to expand to more than $975+ billion by 2013, IMS said.
“Overall, market growth is expected to remain at historically low levels, but stronger-than-expected demand in the U.S. is lifting both our short- and longer-term forecasts,” said Murray Aitken, senior vice president of the healthcare unit at IMS. “The economic climate will continue to be a dampening influence in most mature markets...In the U.S., pricing flexibility and inventory management actions are contributing to much higher growth than anticipated earlier this year, and are the main reasons for the upward adjustment to our five-year forecast.”
In its analysis, IMS identified the following market considerations:
- Growth prospects in the U.S. market improve: U.S. near-term growth prospects have strengthened, reflecting sustained levels of price increases and changing inventory stocking patterns. Pharmacy chains are more tightly managing their inventory levels, which has led to greater purchasing volatility. This also has played a role in unusually high sales growth in the first quarter of 2009. The U.S. 2009 market growth is now expected to be 4.5-5.5 percent, and 3-5 percent in 2010.
- Economic downturn affects markets to varying degrees: Growth has slowed in countries where there is high out-of-pocket spending on pharmaceuticals and steep declines in macroeconomic activity, especially in Russia, Mexico and South Korea. At the same time, growth has been less affected to date in countries where drugs are largely funded publicly, such as in Germany, Japan and Spain. In the U.S., pharma companies’ efforts to expand access to patient assistance programs, as well as co-pay subsidies, are limiting the impact of the economic downturn.
- Impact of innovation/patent loss imbalance dampens growth prospects: The next five years are expected to reflect a significant imbalance between new product introductions and patent losses. This is the primary factor limiting global pharma market growth to the mid-single digits through 2013. Over the next five years, drugs that generate $137 billion in sales are expected to face generic competition, including Lipitor, Plavix and Seretide.
- Pharmerging markets in aggregate sustain strong growth: Despite economic conditions affecting some markets–notably Russia, Turkey, South Korea and Mexico–the seven pharmerging countries are expected in aggregate to grow by 12-14 percent in 2010, and 13-16 percent over the next five years. China’s pharma market is expected to continue to grow at a 20+ percent pace annually, and contribute 21 percent of global growth through 2013.
- Healthcare access & funding under intensifying pressure: The economic climate has heightened payor concerns about healthcare funding, and increased efforts to limit access to non-generic drugs. Over the next five years, markets will be impacted by payor actions, including the imposition of price cuts on existing drugs, raising the standards to achieve reimbursement of therapies and the use of economic incentives for prescribers and pharmacists for a shift to generics.
According to the report, several events may occur in 2010 that also could have a long-term effect on the pharma market, including the potential passage of U.S. healthcare reform, as well as legislative or regulatory actions in other countries, the magnitude of the H1N1 pandemic and the timing and extent of the global economic recovery.