IMS Health Lowers 2009 Global Pharmaceutical Market Forecast to 2.5 – 3.5 Percent Growth
U.S. market to decline in 2009
IMS Health reported that the value of the global pharmaceutical market is expected to grow 2.5 - 3.5 percent on a constant-dollar basis in 2009, two percentage points lower than indicated last October, as deterioration in the global economic environment continues to affect market demand. The updated forecast predicts global pharmaceutical sales exceeding $750 billion for the year, down from the $820+ billion forecast in October 2008, reflecting both the lower growth rate and currency exchange fluctuations. The sector will feel the impact of the economic climate - but to a lesser extent than many other industries - through 2010, when a rebound is expected. The conclusions are drawn from the latest release of IMS Market Prognosis™, a series of strategic market forecasting publications that incorporate updated macroeconomic indicators provided by the Economist Intelligence Unit.
“To the now-familiar factors impeding market growth such as patent expirations, a slowdown in innovative product launches, and hurdles imposed by payers on market access and acceptance, we can now overlay the economic downturn,” said Murray Aitken, senior vice president, Healthcare Insight, IMS. “There is a clear correlation between demand for medicines and key macroeconomic variables such as GDP, consumer spending and government expenditures. We see the worldwide financial crisis contributing to record-low sales growth this year. The pharmaceutical industry is not recession-proof, but it is insulated to a greater extent than other industries where spending is more discretionary.”
While the pharmaceutical market is expected to rebound as the global economy recovers, an unprecedented level of potential patent expirations in 2011 and 2012 will curb sales growth. The global compound annual growth rate (CAGR) for pharmaceutical market growth is forecast to be 3 - 6 percent through 2013.
In its latest analysis, IMS identifies the following key market dynamics:
- Economic conditions affect markets to varying degrees. The extent of the economic impact on each pharmaceutical market is influenced by the healthcare cost burden borne by patients, and the short- and long-term policy responses that governments implement. Countries where patients directly pay a high portion of their drug costs - such as China, Brazil and the U.S. - already are seeing the impact of changing consumer spending behavior. In more publicly funded markets including Turkey, Japan and France, policy responses may differ - from stimulus programs that can have an indirect positive impact on pharmaceutical market growth, to the imposition of price cuts in response to budgetary constraints. In aggregate, expectations for 2009 economic growth in the 15 key developed and emerging countries have declined by 3.4 percentage points since IMS’s October 2008 Market Prognosis Report - driving most of the two percentage point decline in the 2009 forecast since that time.
- The U.S. pharmaceutical market is expected to contract in 2009. Pharmaceutical sales in the U.S. will decline by 1 - 2 percent in 2009, a historic low. While growth will return during parts of the forecast period, the overall five-year CAGR will be essentially flat. As the cost of medication shifts increasingly to patients, consumers are being forced to make difficult decisions about starting or continuing treatment. Federal policies may bolster demand for medicines over the forecast period, but the expiration of several blockbusters in 2011 will impact growth to the end of the forecast period in 2013.
- A new world order is apparent as pharmerging markets grow collectively at a 13 - 16 percent pace through 2013. The seven pharmerging markets will contribute more than half of global market growth in 2009 and sustain an average 40 percent contribution through 2013. China, which is currently the sixth-largest pharmaceutical market, will become the third largest by 2011. The pharmerging markets also will experience some volatility due to the economy, and local responses will vary.
- Mature markets will contribute lower growth. Among the developed markets of Japan, France, Germany, Italy, the U.K., Spain and Canada, their CAGR over the next five years will be 1-4 percent. Each market reflects a unique set of mechanisms to manage healthcare access and costs, including a growing emphasis on regional decision making, promotion of generic drug usage, and price reductions.
- Many innovative treatments expected to be launched will be aimed at narrow patient populations. Approximately 50 - 60 new chemical or biological products are expected to be launched over the next two years. About two-thirds of these products will be specialist-driven, and many of them are aimed at niche indications and narrow patient populations. In 2009, patients can expect new treatment options for diabetes, rheumatoid arthritis, psoriasis, insomnia, thrombosis, acute coronary syndrome, various types of cancer and meningitis. Potential launches in 2010 include therapies for resistant hypertension, osteoporosis, asthma, COPD and pneumococcal disease. Some of these products are first-in-class with novel mechanisms of action, while others offer different modes of treatment likely to improve efficacy and patient compliance. There are 6 - 10 potential blockbusters among expected launches in 2009 and 2010.
“The economic crisis is adding another layer of complexity to an already challenging market environment,” noted Aitken. “To strengthen their resilience, pharmaceutical manufacturers must adapt their strategies and tactics - re-evaluating their commercial models, pursuing opportunities in emerging markets, and strengthening the value proposition of their medicines in ways that resonate with payers and patients.”
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