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Global pharmaceutical market outlook: 2015
IMS Health quantifies the impact of multiple dynamics and examines the spending and usage of medicines in 2015, globally and for specific therapy areas and countries.
The future level of global spending on medicines has implications for healthcare systems and policy makers across developed and emerging economies. Key decision makers share the common goals of improving health outcomes, while controlling costs and expanding access to more of their citizens.
Past spending growth offers few clues to the level of growth to expect through 2015. Unprecedented dynamics are at play — including historically high levels of patent expiry, rapid expansion of demand for medicines in the world's fastest growing economies, fewer new medicines reaching patients, and more moderate uptake of those that do become available. These dynamics are driving rapid shifts in the mix of spending between branded products and generics; and between spending in the major developed countries and those 17 high growth emerging countries referred to as 'pharmerging'.
Through this report, IMS Health has attempted to quantify the impact of these dynamics and examine the spending and usage of medicines in 2015, globally and for specific therapy areas and countries.
Global market scenario
Spending on medicines which was estimated at $856 billion in 2010, is expected to reach nearly $1,100 billion in 2015, reflecting a slowing growth rate of three-six per cent over the five year period compared to 6.2 per cent annual growth over the past five years. (See graph: Shifting pattern in global markets: 2005-2015)
A distinct shift is also expected in the market shares across the globe, with the US share of global spending declining from 41 per cent in 2005 to 31 per cent in 2015, along with the share of spending from Europe declining from 27 per cent to 19 per cent over the same period. Meanwhile, 17 high growth emerging markets (pharmerging) including China, India, Brazil, Russia and Mexico will contribute 28 per cent of total spending by 2015, up from only 12 per cent in 2005.
The next five years will also see an accelerating shift in spending toward generics, rising to 39 per cent of spending in 2015, up from 20 per cent in 2005. (See pie charts: Spending by segment)
On the other hand, share of patented brands which accounted for nearly 70 per cent of global pharmaceutical spending in 2010 are expected to decline to 53 per cent in 2015, on account of patent expiries, mainly in the developed markets.
Rapid growth in pharmerging markets is largely from spending on generic drugs which will contribute to the rise in the generic share of spending.
Key drivers of change
In the major developed markets, spending on branded medicines will remain essentially unchanged in 2015 from the level in 2010, since all increases in spending on brands will be offset by reduced spending on those brands losing patent protection.
Innovative products are expected to be launched which will bring important new treatment options to patients with cancer, diabetes, thrombosis and debilitating diseases of the central nervous system. Of particular note are the products for diabetes that are expected to bring new options to patients. Additional important new therapies with orphan drug designations or narrow indications are also expected, but will not be a major driver of increased spending.
All of the increase in spending on brands - both new and existing - will be offset by patent expiries which will reduce brand spending by $120 billion through 2015. Only spending on generics will increase in developed markets over the next five years. In high growth emerging markets, spending will increase by $150 billion, as improved access and strengthening economies drive higher demand, primarily for generic drugs.
Policy-driven changes and impacts through 2015
Significant policy changes, made in 2010, will have longer-term impacts on the spending and usage of medicines across many countries including the passage of the Affordable Care Act in the US, a sweeping reform of Japan's unique every-other-year price-cut system, and several new reforms to rebalance spending priorities in each major European market. Important steps were also taken in the US and Europe in the development of scientific guidelines for the approval of biosimilars.
Key therapy areas
Spending on most therapies will grow at slower rates—or even decline—through 2015. Specialty medicines will experience continued growth in the medium term driven by novel mechanisms, improved efficacy and relatively large patient populations, leading to increased uptake of these high-value medicines.
Global oncology spending will reach $ 75 billion by 2015, rising at a much slower rate than in the past five years, as existing targeted therapies have already been widely adopted in most developed markets, some major products will be exposed to generic competition, and new products, with the potential to extend lives, will add treatment options in several major tumours, but will not contribute to significantly higher spending.
Global spending on diabetes will increase by four-seven per cent over the next five years, accompanying increased prevalence of type II diabetes and treatment rates especially in countries such as China, India, Mexico and Brazil. Greater use of oral antidiabetic agents is expected due to their convenience and efficacy.
Annual spending growth through 2015 will slow to two-five per cent for asthma and COPD medicines compared to nine per cent growth over the past five years; spending on lipid regulators will fall to $31 billion in 2015 from $37billion in 2010; and patent expiries will limit angiotensin inhibitors growth to one-four per cent over the next five years compared to 12 per cent over the prior five year period.
Some of the innovative research products launched/to be launched, which are expected to drive markets (especially in the developed markets) in the next few years are included in the table, 'Selected product launches 2009-2013' and span disease areas like arrhythmia, autoimmune diseases, diabetes, hepatitis C, lupus, melanoma, multiple sclerosis, osteopororsis, thrombosis and prostrate cancer.
However, some of the gains from the launch of these innovative products will be offset by the patent expiry of existing brands, like Lipitor, Plavix, Nexium, etc (See table: Major protection expiries by country by year)
Global biologic spending was $138 billion in 2010, compared to $311 million for biosimilars. Much of the global biologics spending is concentrated in the US. Biosimilar spending is concentrated in Germany and other European markets, which adopted approval guidelines earlier and now account for over 80 per cent of global biosimilars spending. (See table: 'Global biologics spending')
Global biologics spending
Europe's approval guidelines for monoclonal antibodies, expected later this year, will add new molecules to this competitive space through 2015.
The US approval pathway, included in the Affordable Care Act, grants 12 years of market exclusivity to originator biologics. New biosimilars are expected to enter the US market by 2014, including epoeitin alfa and filgrastim, which currently have proved biosimilars only outside the US.
Global country rankings
Rankings of the top five countries will remain unchanged between 2010 and 2015
Among the top 20 countries, the big gainers in rank between 2010 and 2015, will be Venezuela (+8), Argentina (+6), and India (+4).
India market scenario
The Indian pharma market is forecasted to grow at a CAGR of 15.9 per cent (±4.0 per cent) between 2010 and 2015, doubling in five years to Rs 119677 crore.
Market value calculated at ex-manufacturer price level
The hospital sector is expected to grow strongly and increase its share from eight per cent in 2010 to 11 per cent in 2015, while the retail sector (though growing in double digit figures) will post a corresponding decline.
Key growth drivers
Macro economic factors driving the market during the 2010-2015 period, are primarily robust economic growth, greater marketing penetration into extra-urban and rural areas, epidemiological changes, with a rapid increase in chronic, age-related disorders; continuing rapid expansion of the private hospital sector, and increased government spending on improvements in healthcare infrastructure.
On the other hand one factor that may impact the market trend negatively, is increasing regulation of drug prices, with the possibility of a greater number of drugs included in the Drug Price Control Order (DPCO).
Market forecast for the top 10 therapies, for the period 2010-2015 is as shown in the table, '2010-2115: Top 10 therapy forecast. These 10 classes accounted for 92.3 per cent of the market in 2010 and are expected to still account for 92.3 per cent in 2015. Changing epidemiological factors that are resulting in a rapid increase in chronic age-related diseases is driving growth of cardiovasculars, followed by CNS, genito-urinary drugs and alimentary tract and metabolism class (including anti-diabetics). Oncology drugs, in spite of a relatively lower base show the highest compounded annual growth rate of 17.5 per cent over the period 2010-2015. Musculo-skeletal drugs, followed by systemic anti-infectives and respiratory drugs shows the maximum decline in market shares, even as they post healthy double-digit growths, over the period 2010-2015.