The latest IMS Health report has estimated the global pharmaceutical sales at $643 billion in 2006 registering a 7 per cent growth over the previous year. North America continues to be largest market accounting for 45 per cent of the global sales at $291.1 billion with a growth of 8.3 per cent. Compared to a growth rate of 5.4 per cent in 2005, last year's growth should be a consolation for the North American industry. The second major market, Europe, comprising of France, Germany, Italy, Spain and UK, grew only by 4.4 per cent at $123.2 billion, actually down from 4.8 per cent in 2005. Japan, the third largest market segment reported a decline of 0.4 per cent in sales at $64 billion in 2006. As against this, Latin America and Asia Pacific region recorded impressive growth rates of 12.7 per cent and 10.5 per cent respectively. The 2006 data also shows the emerging status of Indian market with a total sales of $7.3 billion registering a 17.5 per cent growth. China, on the other hand, reported a slow down in growth rate at 12.3 per cent in 2006 with a total sales of $13.4 billion. The Chinese market grew as much as 20.5 per cent in 2005 which was much higher than India in that year. Relatively slow or negative growth rates in three major market segments and at the same time double digit growth in Latin America and Asia Pacific regions during 2006 is indicative of changing dynamics of the global pharmaceutical market. A significant factor to be noted in this context is the loss of patent protection to products in excess of 18 billion dollars in seven key markets including the US during 2006.
With more number of patent expiration expected in the next three years and growing preference for low cost therapies, generics are going to play an important role in healthcare sector in the years to come. Increasingly active role being played by the patient community in their healthcare, especially in matters like drug safety and pricing policies, will also determine the fortunes of the drug companies. This is happening at a time when the global pharmaceutical giants are struggling for blockbusters and when regulatory approvals have become more stringent than any time in the past. Pfizer, GSK, Merck, Sanofi cannot claim to have any major breakthrough drugs coming into the market in the near future. The IMS study pointed out that growth in the R&D pipeline is strong and at the end of 2006, there are 2,075 molecules were in phase I and II development. It is too premature to say how many of them will reach the market place considering the present failure rate in these stages. Right now, most large players are facing loss of patent monopoly on many of their products. The prospects of loss of revenue on account of patent expiration is pushing the pharma giants to spend heavily on marketing and promotion rather than on new molecular research. A Pharmabiz study of top 15 global pharma giants revealed that the marketing expenditure as percentage of total sales of these companies worked out to 30.5. As against this, the R&D spends as percentage of total sales of these giants worked out to just 15.1. This is not a healthy trend for an industry which is respected for years for its innovative research to discover new drugs for deadly diseases facing the humanity.