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US growth will be flat through 2013, then jump in 2014 as Obamacare takes effect
Global Use of Medicines: Outlook through 2016, the annual market forecast from the IMS Institute for Healthcare Informatics (Parsippany, NJ), predicts a general 5-7% global growth rate by 2016, up from the current 3-4%. The drivers will be double-digit growth in China and other “pharmerging” countries*, as IMS Institute has labeled them and, to a lesser degree, a bump in drug spending in the US if the Affordable Care Act (the main part of which was affirmed by the US Supreme Court in early July) takes hold as planned. A faster rate of new molecular entity (NME) introductions—from 28 per year in the past five years to 32-37 per year in the next five—will also help.
Drug spending was found to be $956 billion in 2011 (using Q4 currency exchange rates), and will be $1.175-1.205 trillion in 2016. Branded products will grow from $596 billion in 2011 to $615-645 billion in 2016 (up 3-8%) while generics will grow from $242 billion to $400-430 billion—a 65-78% increase. (An “other” category of drugs, valued at around $130 billion, includes OTCs and diagnostics.) All of these numbers are ex-manufacturer; IMS also calculates that branded products saw overall discounts of $110-130 billion in 2011, split evenly between branded and generic sales.
Biologics, which include biotech products as well as a few chemical entities, constituted a $157-billion market worldwide in 2011, and will grow to $200-210 billion in 2016, says the Institute. Biosmilars—a few of which are already available in non-US markets—were $693 million in 2011, and are projected to reach $4-6 billion in 2016, “largely because most biologic medicines will stay protected by patents or market exclusivity in many countries,” says the report.
Generic growth in developing world
The Institute forecasts that the US market will average 1-4% annual growth through 2016, with a sizable jump (about 3%) in 2014 as Obamacare takes hold. The EU5 (Germany, France, Italy, UK and Spain) will see -1-2% growth in that period as macroeconomic issues work out and tighter controls on reimbursements are established. Japan, a $111-billion market in 2011, will see growth comparable to the US’.
Meanwhile, the pharmerging countries will continue the double-digit growth they have shown in the past half-decade, led by China, which is projected to more than double its domestic market. Generic and other products will represent 83% of the overall growth. Overall, the growth is dependent on government-supported or -funded programs.
The slightly higher pace of expected new product introductions is cause for cheer in the industry—if it holds true. In both the past five years, and the next five, IMS Institute finds that new products are targeted for 1) cancer; 2) diabetes; and 3) antibiotics. In the next five years, treatments for Alzheimers will appear, as well as for HIV infection, malaria and heart attack. Another sort of the data, showing spending by therapy area, and also that specialty products (generally, high-cost, biologic injectables) dominate growth areas. At the same time, the fastest-growing category for the next five years is projected to be vaccines, while lipid regulators, which had near-zero growth in the past five years, will actually shrink in the next five.
The IMS Institute makes use of a variety of IMS Health products, such as IMS Market Prognosis, MIDAS, Therapy Forecaster and others, and also incorporates macroeconomic data from the Economist Intelligence Unit.
*IMS splits pharmerging into three tiers: China; Brazil, India and Russia; and Argentina, Egypt, Indonesia, Mexico, Pakistan, Poland, Romania, South Africa, Thailand, Turkey, Ukraine, Venezuela and Vietnam.