November 25,2013 | By Márcio Barra
Last week, IMS released a report entitled “The Global Use of Medicines: Outlook through 2017″, predicting that total spending on medicines will reach the $1 trillion threshold in 2014. Expenditure is expected to hit to $1.2 trillion by 2017, representing a 5-7 % growth rate from 2013. That’s an increase of up to $260 billion over the next 5 years. In 2012, global spending stopped shy of $1 trillion, reaching $965 billion alongside a 2.6% growth rate.
The reasons pointed out by the report for this expected increase in growth rate? Greater access to medicines by the world’s rapidly expanding middle class, alongside stronger economic prospects in developed nations, especially China. It is important to make a distinction here, as expenses are not the same as profits, since most of the growth will be fuelled by generic prescriptions as many blockbuster drugs will come off-patent and costs with the growing geriatric population rise. A prime example of this is Japan, a country with historically low generic use but with an ever growing geriatric population, making a branded drug marketplace something unsustainable. Japan, North America and European markets are expected to see an annual spending growth of 1-4 %, owing to the current austerity measures targeted at medicine expenditure containment in Europe, the uncertainties of the affordable Health Care act in the US, and the aforementioned shift of focus from branded to generics in Japan and in the rest of these economies.
As for China, it will officially be the world’s second-largest drug market by 2017, as the country undergoes an expansion of its healthcare system with the goal of reaching universal coverage by 2020. This expansion will push its drug market towards a 14% to 17% expansion through 2017 and China is expected to represent 34% of total growth in global medicine spending over the next five years. It is worth pointing out that this growth rate is lower than the growth forecasts of previous years, since China’s economic growth has slowed. Like the UK and many other countries, the Chinese Government is more and more focused on imposing limits on drug prices to reduce healthcare costs in China and expand medical care to its aging population. This could ultimately limit the access of foreign brands into the Chinese market and in IMS’s worst case scenario make the market grow only $144 billion over the next 5 years. In the best case scenario, growth goes up to $187 billion if the country’s private insurance industry takes off and manages to support the uptake of new, expensive drugs.
These new, expensive drugs are called specialty medications, better known as biologic drugs, which are expected to grow 30% by 2017 worldwide. While these drugs face a major hurdle in the form of extremely high prices that are not especially well received by austerity stricken countries, the lack of competition from biosimilars gives these drugs ample market time.
IMS also noted that developed and emerging markets will focus on different disease areas. The top classes in developed markets by 2017 for developed countries, for example, will be oncology, diabetes, anti-TNFs and pain, with a heavy emphasis on specialty medications, whereas developed markets will focus on pain, CNS drugs and antibiotics, mostly small molecules.
The full report is available at www.theimsinstitute.org. An iTunes app is also available at