Growth Perspectives: Pharma Market
Growth perspectives in the pharma market via a selection of industry experts.
The global pharmaceuticals market was worth $934.8 billion in 2017 and will reach $1170 billion next year in 2021. The healthcare and medical equipment and services sector is growing at a similar pace. But this growth prediction doesn't come without its challenges.
We'll attempt to explore some of the implications via some perspectives and commentary from third-party providers on this post.
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THE GLOBAL MARKET
As Matej Mikulic states on Statista: “Many of the leading pharma companies come from the US, and therefore, it is no surprise that the country has the largest pharmaceutical market worldwide. China has become one of the main players in the industry, and annual growth rates of the emerging pharma market have been strong in recent years. However, projected pharmaceutical sales show that the established markets of North America and Europe will still be leading the way in 2023. Some of the biggest European companies are Novartis, Roche, GlaxoSmithKline and Sanofi.”
THE CHANGING GEOGRAPHY OF PHARMA MARKETS
“Growth over past decades means that North America and Western Europe still account for 56% of the global market, but Asia Pacific has overtaken Western Europe as the second-largest region” according to The Business Research Company. “Growth in Asia Pacific is fueled by increased affordability of drugs resulting from the launch of low-priced generics. Other factors that are positive for growth in Asia Pacific are the rise of GDP per capita in the region, government programs to support healthcare, and rapid urbanization, which brings both doctors and pharmacies within easy reach of increasing proportions of growing populations. Pharma sales in Asia Pacific will grow at 8.4% a year to 2021”
MACROECONOMIC AND POLITICAL CHANGES IN LATAM UNDERPIN GROWTH PROSPECTS
IQVIA state the potential for growth in the South American region: “The improving economy in Brazil, supported by market-oriented reforms, will boost growth in the pharmaceuticals market in the short-to-medium term. Strong demographics, rising employment levels and higher disposable incomes in Brazil are major drivers underpinning the positive outlook for the pharmaceutical market over the 2019-2023 period. Other factors, such as OTC market deregulation, the fast growth of pharmacy chains, the growing trend by pharmacies to provide value-added services to boost margins, as well as the shortcomings of the financially over-burdened SUS, will drive patient demand for medicines in the retail sector.”
THE FRAGMENTATION OF THE EU PHARMACEUTICAL MARKET
“The fragmentation of the EU pharmaceutical market has resulted in a lucrative parallel trade. This benefits neither social security nor patients and deprives the industry of additional resources to fund R&D. Parallel trade was estimated to amount to € 5,202 million (value at ex-factory prices) in 2016” says an EFPIA report. “The research-based pharmaceutical industry can play a critical role in restoring Europe to growth and ensuring future competitiveness in an advancing global economy. However, the sector faces real challenges. Besides the additional regulatory hurdles and escalating R&D costs, the sector has been severely hit by the impact of fiscal austerity measures introduced by governments across much of Europe since 2010.”
TRENDS FOR NEW PRODUCTS
Giuliana Miglierini on Pharma World discusses the trends related to new products: “Average spending level on new products launched in 2019-2023 is expected to reach $45.8 billion, slightly greater that the $43.4 billion observed for products launched in 2014-2018. This year and the next one are expected to show the bigger number of new launches, especially in the specialty, orphan, biologics and oncology areas, thus confirming the trend towards an increasing role of precision medicine where a new treatment is supposed to reach fewer patients. Stratification using specific biomarkers is an add-on characteristic of such approach.”
PRICING COMPLEXITIES
Pharmaceutical Commerce Magazine addresses the recent pricing debate in the US: “There is a newly energized debate in the US over pricing and reimbursement policies, both for commercial and publicly funded insurance plans, but IQVIA expects only “executive rulemaking authority” (read: HHS) to affect policies for federally funded programs in the near term. IQVIA totes up over 20 distinct possible changes in pricing policies overall, ranging from near-certainties (step therapy for Medicare Part B) to low probabilities (cross-border trade); overall, it’s possible that the current volume of rebates ($150 billion) could drop to $75-100 billion, which “could induce manufacturers into price competition where it has not existed and potentially reduce their margins. This is arguably a goal of the proposals.”
THE COMPETITIVE LANDSCAPE
Similarly, Pharma Mirror Magazine address the competitive nature of the market: “Pharmaceutical drugs are subject to a large number of laws and regulations that deal with patenting, testing, safety, efficacy and marketing and affect the size and growth rates of the market. Together with the high R&D costs involved in creating new drug solutions, these can act as barriers to entry for small companies. However, pharmaceutical companies produce both generic and branded drugs. Generics, which are copies of patent-expired drugs, are opportunities for smaller entrants. They are taking an increasing share of the market, particularly in developing economies, where governments are encouraging their production in order to make lower-price treatments more widely available.”
VISUALISING THE FUTURE OF THE PHARMA MARKET
“By 2050, there will be two billion people that are 60 years or older globally. Meanwhile, the number of seniors (65+ years old) in the U.S. will double to 100 million by 2060. To meet the needs of this ageing population, we will continue to need larger quantities and more varieties of prescription drug treatments – an industry that is expected to skyrocket to $1.2 trillion in size by 2024” says Jeff Desjardins via Visual Capitalist.
Using data from an EvaluatePharma report, he notes these key insights: “Firstly, the oncology therapy area – which makes drugs that are used to treat various forms of cancer – is by far the largest in the pharma world and is projected to maintain its dominance going forward, growing at an impressive 12.2% CAGR to $233 billion by 2024. Next, while sales in cancer-related drugs will be the most in absolute terms, the fastest-growing treatment area is actually in immunosuppressants – a segment of drugs that make a body less likely to reject a transplanted organ, such as a liver, heart, or kidney. Lastly, while sales in the pharma market will be averaging 6.1% in annual growth as a whole, there are two major segments that will see negative annual growth going forward: Anti-virals (-0.9%) and MS Therapies (-0.8%).”
