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Global pharmaceutical mkt may grow 4-6% in 2010: IMS Health
IMS Health reported that the value of the global pharmaceutical market in 2010 is expected to grow 4 - 6% on a constant-dollar basis, exceeding US$825bn, driven by stronger near-term growth in the U.S. market. The forecast, the leading annual industry indicator of market dynamics, predicts global pharmaceutical market sales to grow at a 4 - 7%compound annual growth rate through 2013, and takes 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$975bn by2013.
In its latest forecast, the company raised its expectations for five-year pharmaceutical market growth by onepercentage point, partly due to the stronger demand being experienced in 2009. The conclusions are drawnfrom the latest release of IMS Market Prognosis, the company’s series of strategic market forecastingpublications.
“Overall, market growth is expected to remain at historically low levels, but stronger-than-expected demandin the U.S. 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 maturemarkets, particularly in those countries with rising budget deficits and publicly funded healthcare systems. Inthe U.S., pricing flexibility and inventory management actions are contributing to much higher growth thananticipated earlier this year, and are the main reasons for the upward adjustment to our five-year forecast.”In its latest analysis, IMS identifies the following key market dynamics:
· Growth prospects in the U.S. market improve. Near-term growth prospects in the U.S. havestrengthened 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 expectationsof patient demand, which has led to greater purchasing volatility than in previous years. This also has playeda role in unusually high sales growth in the first quarter of 2009 relative to forecast expectations. U.S. marketgrowth in 2009 is now expected to be 4.5 - 5.5%, and 3 - 5% in 2010. While payers seek to limitprice increases and boost the use of lower-cost generics, pharmaceutical manufacturers are expected tomaintain their pricing practices, competing on the basis of clinical evidence and value. Current pricingpractices by the industry also include the use of off-invoice discounts and rebates, which are not reflected inIMS’s forecast and reported data, and are understood to be increasing.
· Economic downturn affects markets to varying degrees. Growth has slowed in countries wherethere 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 incountries where drugs are largely funded publicly, such as in Germany, Japan and Spain. However, newcost-containment measures expected to be introduced during the forecast period likely will impact the pace of growth in these markets. In the U.S., 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 their impact of the economic downturn to some extent.
· 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$137bn 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.
· 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 - 14% in 2010, and 13 - 16%over the next five years. China’s pharmaceutical market is expected to continue to grow at a 20%pace annually, and contribute 21% 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.
· Healthcare access and funding under intensifying pressure. The economic climate hash eightened 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 pharmaceuticalmarket. These include the potential for passage of comprehensive healthcare reform in the U.S. as well aslegislative or regulatory actions in other countries, the magnitude of the H1N1 pandemic, and the timing andextent of the global economic recovery.
“While our outlook for the global market is more positive than earlier in the year, the fundamental dynamicsof 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 theU.S. market, the drive by pharmaceutical manufacturers to adapt to the longer-term marketplace trends andevolving patient needs will continue undiminished.”