May 18, 2011
Global Drug Sales Growth Declines With Generics
Over the next five years, as brands lose their patent protection to less expensive generics and emerging markets, global sales growth of prescription drugs could be cut in half, forecasts IMS Institute for Healthcare Informatics.
IMS Institute predicts that global spending for medicines will reach nearly $1.1 trillion by 2015, which reflects a slowing compound annual growth rate of 3 to 6 percent over the next five years, compared with the 6 percent annual growth within the past five years, the report states."Past patterns of spending offer few clues about the level of expected growth through 2015," says Murray Aitken, executive director of IMS Institute.
Among the key factors reported as influencing future growth include lower levels of spending growth for medicine in the U.S., the ongoing impact of patent expirations in developed markets, continuing strong demand in pharmerging markets, and policy-driven changes in several countries.
"The future level of spending on medicines has striking implications for healthcare systems and policy makers across the developed and emerging economies," Aitken saaid in a statement.
"There are unprecedented dynamics at play, which are driving rapid shifts in the mix of spending by patients and payers between branded products and generics, and across both developed and pharmerging markets."
The report also predicts that U.S. sales will grow only between 0 to 3 percent a year over the five year period, while Europe sales will increase 1 to 4 percent, according to Reuters.
Branded drugs are expected to have little change in developed markets for 2015, leaving growth for higher demands for cheaper generics.
By 2015 a large number of big drug companies will lose their U.S. patent protection, giving way to a wave of new generics into the market. Reuter reports that companies such as Pfizer Inc.'s $10 billion-a-year cholesterol fighter Lipitor, Bristol-Myers Squibb Co.'s Plavix blood clot preventer and Eli Lilly and Co.'s Zyprexa for schizophrenia will lose their patents and have to compete with their generics.
Very few novel drugs are being approved to offset lost sales from generic counterparts. Aitken told Reuters, "We continue to be disappointed by the number of new chemical entities and biologics entering the market."
IMS Institute reports that generic formulations of the maturing drugs will produce $98 billion in net savings for insurers in developed countries through 2015.
Share of U.S. global spending will decline from 41 percent in 2005 to 31 percent in 2015, the report says, while the top five European countries will see shares of spending decline from 20 percent to 13 percent.
As for emerging markets, the report predicts that spending will double over the next five years to reach between $285 million and $315 million a year.
According to the report, "Seventeen high growth emerging markets, led by China, will contribute 28 percent of total spending by 2015, up from only 12 percent in 2005," with growth coming primarily from generics.
Aitken says, "Over the next five years, we'll not only see total spending exceed $1 trillion, but payers will be managing a significant patent dividend while emerging market governments seek to expand treatment options to more patients. All of this will require that healthcare stakeholders engage in a truly meaningful dialogue as they seek the common goal of increased access, cost reductions and better outcomes."
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