IMS Health has projected that the value of the global pharmaceutical market in 2010 is expected to grow by 4 to 6 per cent on a constant-dollar basis, exceeding US$ 825 billion, driven by stronger near-term growth in the US market.
The forecast, the leading annual industry indicator of market dynamics, predicts global pharmaceutical market sales to grow at a 4 to 7 per cent compound annual growth rate through 2013, taking into account the impact of the global macro-economy, 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 US$ 975+ billion by 2013.
In its latest forecast, IMS raised its expectations for five-year pharmaceutical market growth by one percentage point, partly due to the stronger demand being experienced in 2009. The conclusions are drawn from the latest release of IMS Market Prognosis, the company's series of strategic market forecasting publications.
"Overall, market growth is expected to remain at historically low levels, but stronger-than-expected demand in the US is lifting both our short- and longer-term forecasts," said Murray Aitken, senior vice president, Healthcare Insight, IMS. "The economic climate will continue to be a dampening influence in most mature markets, particularly in those countries with rising budget deficits and publicly funded healthcare systems. In the US, 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 latest analysis, IMS identifies the near-term growth prospects in the US have strengthened in recent months, reflecting both sustained levels of price increases and changing inventory stocking patterns. Pharmacy chains are more tightly managing their inventory levels based on expectations of patient demand, which has led to greater purchasing volatility than in previous years. This also has played a role in unusually high sales growth in the first quarter of 2009 relative to forecast expectations. US market growth in 2009 is now expected to be 4.5 to 5.5 per cent, and 3 to 5 per cent in 2010. While payers seek to limit price increases and boost the use of lower-cost generics, pharmaceutical manufacturers are expected to maintain their pricing practices, competing on the basis of clinical evidence and value. Current pricing practices by the industry also include the use of off-invoice discounts and rebates, which are not reflected in IMS's forecast and reported data, and are understood to be increasing.
Economic downturn affects markets to varying degrees and 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. However, new cost-containment measures expected to be introduced during the forecast period likely will impact the pace of growth in these markets.
In the US, pharmaceutical manufacturers' efforts to expand access to and awareness of patient assistance programs, as well as co-pay subsidies for patients in need, are limiting the impact of the economic downturn to some extent.
The IMS report stated that the impact of the innovation/patent loss imbalance dampens growth prospects. Consistent with trends of the past several years, the next five are expected to reflect a significant imbalance between new product introductions and patent losses. This is the primary factor limiting global pharmaceutical market growth to the mid-single digits through 2013. During the next five years, products that currently generate an unprecedented US$ 137 billion in sales are expected to face generic competition, including Lipitor, Plavix, and Seretide.
At the same time, new products that will enable innovative approaches for treating patients suffering from diseases such as osteoporosis, respiratory ailments, thrombosis, multiple sclerosis and cancer are not expected to generate the same magnitude of sales as products losing patent protection.
According to IMS report pharmerging markets in aggregate sustain strong growth. Despite economic conditions significantly affecting some markets - notably Russia, Turkey, South Korea and Mexico - the seven pharmerging countries are expected in aggregate to grow by 12 to 14 per cent in 2010, and 13 to 16 per cent over the next five years. China's pharmaceutical market is expected to continue to grow at a 20+ per cent pace annually, and contribute 21 per cent of overall global growth through 2013. Russia and Turkey may be impacted significantly by new measures intended to reduce the level of healthcare spending in those two markets.
Further, healthcare access and funding under intensifying pressure as the economic climate has heightened concerns by payers about healthcare funding, and intensified their efforts to limit access to non-generic drugs. During the next five years, markets will be impacted by numerous payer actions, including the imposition of price cuts on existing drugs, the raising of standards required to achieve reimbursement of innovative therapies, and the use of economic incentives for prescribers and pharmacists to drive a shift to generic alternatives. Evidence of the value that medicines bring to healthcare systems will be required to achieve access and funding in both developed and emerging markets.
A number of events may occur in 2010 that also could have a long-term effect on the pharmaceutical market. These include the potential for passage of comprehensive healthcare reform in the US 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.
"While our outlook for the global market is more positive than earlier in the year, the fundamental dynamics of the innovation cycle, funding pressures, and the broader macroeconomic environment will result in mid-single-digit growth over the next five years," noted Aitken. "Notwithstanding the improved prospects in the U.S. market, the drive by pharmaceutical manufacturers to adapt to the longer-term marketplace trends and evolving patient needs will continue undiminished."
Based on a rigorous evaluation of the key events affecting the marketplace, IMS Market Prognosis provides a five-year forecast at the country, regional and global level. The scope of coverage includes 42 in-depth country analyses and more than 220 top-line country forecasts in 11 regions worldwide. The pharmerging markets are Brazil, China, India, Mexico, Russia, South Korea and Turkey.