US market for pharmaceuticals was $320 billion in 2011, says IMS Institute

In its annual summation of the pharmaceutical business in the US, the IMS Institute for Healthcare Informatics reports that total US sales (ex-manufacturer, not including discounts) was $320 billion, up 3.7% in nominal terms, but 0.5% in real terms (and accounting for population growth). On the plus side, 34 new molecular entities (chemical and biologic) were launched in the year—the most in the past 10 years, and some of these ramped up rapidly. On the minus side, $14.9 billion in branded product value was lost as major drugs went off-patent (this is offset to some degree by a rise of $5.6 billion in generic sales). Generics have now reached 80% of all prescriptions, and IMS’ calculation of the “generic utilization rate” (the actual use of generics compared to potential total substitution) is 94%.

The macro trend that Michael Kleinrock, director of research development at the IMS Institute, emphasizes in reviewing these data is the flattening and decline of doctor visits and prescription fulfillments during the year, continuing a trend of the past couple years. Overall prescription usage fell by 1.1%, including a 3.1% decline among seniors, but a 2.0% increase among the 19-25 age group—which is attributable in part to the Affordable Care Act allowing young adults to remain on their parents’ health insurance. Doctor’s office visits declined by 4.7% (following a 4.1% decline in 2010). Conversely, emergency room visits increased by 7.4% (from a much smaller base than office visits).

“The combination of the bad economy of the past couple years, with rising copays for drug purchases, is changing patient behavior, and this has serious implications for the future of healthcare system costs,” says Kleinrock. “If patients are delaying treatment until conditions become more serious, or not updating therapy for chronic conditions, eventually this will contribute to more intensive care and higher healthcare costs in the future.”

Channel trends

Last year, there were signs that mail-order delivery of pharmaceuticals was plateauing, while independent pharmacies were showing some encouraging growth; this year, both trends reversed significantly. In terms of dollars, chain pharmacy retains its dominant position, with $227.3 billion in sales—up 4.0% and representing one third of the overall market, and scrip volume was up 0.6%. But mail order’s dollar volume jumped 6.4%, to $55.1 billion, and scrip volume rose by 9.8%. Meanwhile, independent pharmacies saw a sales volume increase of only 0.3% (which is less than the overall sales increase) and scrip volume declined by 11%.