PARSIPPANY, N.J. — Following
several years of slowing growth, the global market for medicines is poised to
rebound from an expected low point of 3% - 4% growth in 2012 to 5% - 7%
in 2016, according to a new forecast issued by the IMS Institute for
report, “The Global Use of Medicines: Outlook through 2016,” found that annual
global spending on medicines will rise from $956 billion in 2011 to nearly $1.2
trillion in 2016, representing a compound annual growth rate of 3% - 6%. Growth
in annual global spending is forecast to more than double by 2016 to as much as
$70 billion, up from a $30 billion pace this year, driven by volume increases
in the “pharmerging” markets and an uptick in spending in developed nations.
patent expiries, which will peak in 2012, as well as increased cost-containment
actions by payers, will constrain branded medicine spending growth through
2016, at 0 – 3%. Developed markets are expected to experience their lowest
annual growth this year, at less than 1% or $3 billion, and then rebound to
$18-20 billion in annual growth in the 2014-16 period.
IMS Institute identifies the following dynamics:
Health systems in developed economies will experience slow growth in medicine
spending. Spending on medicines in developed nations will increase by a total
of $60-70 billion from 2011 to 2016, following an increase of $104 billion
between 2006 and 2011. Despite the highest number of patent expiries in
history, spending in the U.S. will grow by $35-45 billion over the next five
years, representing an average annual growth rate of 1% - 4%, as newer
medicines that address unmet needs are introduced and patient access expands in
2014 due to implementation of the Affordable Care Act. In Europe, growth will
be in the -1% to 2% range due to significant austerity programs and healthcare
cost-containment initiatives. The Japanese market for medicines is forecast to
grow 1% - 4% percent annually through 2016, slightly lower than the rate during
the prior five years and reflecting biennial price cuts scheduled for 2012,
2014 and 2016. Overall, patent expiries in developed markets will yield a
five-year "patent dividend" of $106 billion, reflecting reduced brand
spending of $127 billion offset by $21 billion in higher generics spending.
Health systems in pharmerging markets will nearly double their medicine
spending in five years. Annual spending on medicines in the pharmerging markets
will increase from $194 billion last year to $345-375 billion by 2016, or $91
in drug spending per capita. The increase will be driven by rising incomes,
continued low cost for drugs, and government-sponsored programs designed to increase
access to treatments - by limiting patients'' exposure to costs and encouraging
greater use of medicines. Generics and other products, including
over-the-counter medicines, diagnostics and non-therapeutics, will account for
approximately 83% of the increase.
Pharma manufacturers will see minimal growth in their branded products through
2016. The market for branded medicines will experience flat to 3% annual growth
through 2016 to $615-645 billion, up from $596 billion in 2011. In the major
developed markets, branded medicine growth will be severely constrained at only
$10 billion over the five-year period due to patent expiries, increased
cost-containment actions by payers and modest spending on newly launched
products. The pharmerging markets are expected to contribute $25-30 billion in
branded product growth over the same period. Off-invoice discounts and rebates
will offset about $5 billion of global branded medicine growth.
Manufacturers of small molecule generics will experience accelerating growth.
Global generic spending is expected to increase from $242 billion in 2011 to
$400-430 billion by 2016, fueled by volume growth in pharmerging markets and
the ongoing transition to generics in developed nations. The impact of patent expiries
primarily will be felt in the U.S. In Europe, limited savings from expiring
patents are prompting policy shifts to encourage greater use of generics and
lower reimbursement for these products.
Providers will have more treatment options due to additional new medicines
being launched. Global launches for New Molecular Entities (NMEs) will rebound
during the next five years, as 32-37 NMEs are expected to be launched per year
through 2016. Between 2011-16, 160-185 NMEs are expected to launch, compared
with 142 between 2007-11. Innovative therapies to extend or improve patients''
quality of life are anticipated for treatment of Alzheimer''s, autoimmune
diseases, diabetes, and a number of cancer and orphan diseases. Treatments for
global priority diseases, such as malaria, tuberculosis and neglected diseases,
are expected to improve, although gaps will remain.
Biologics manufacturers will benefit from expanding market opportunity.
Biologics are expected to account for about 17% of total global spending on
medicines by 2016, as important clinical advances continue to emerge from
research. Seven of the top ten global medicines by spending will be a biologic
within five years. Adoption of biosimilars as low-cost alternatives to the
original biologic medicines will remain limited, as biologics remain protected
by patents or market exclusivity in many countries.