Cancer, hep C and other specialty meds to drive global drug market to $1.4T by 2020

Global drug spending will take a major leap over the next 5 years, according to a new report from the IMS Institute of Healthcare Informatics. Worldwide spending on pharma products is expected to shoot up to $1.4 trillion by 2020, an increase of almost one-third--or $349 billion--from 2015, the company said.

IMS' executive director Murray Aitken

Pricey meds will fuel the spending leap, IMS said in its annual report on drug spending, but so will increased access to cheaper meds and innovative therapies for diseases such as hep C and cancer. And emerging markets will increase spending, although some countries' growth will be slower than others.

Specialty meds will continue their surge through 2020, with drugs for cancer, autoimmune disorders and hep C bringing in the most dollars. Oncology drugs are expected to hit between $100 billion and $120 billion in sales in 2020, welcome news for cancer drugmakers such as Roche ($RHHBY) and Novartis ($NVS) as they beef up in the field. Biogen ($BIIB), Sanofi ($SNY) and Germany's Merck KGaA can also celebrate as autoimmune meds--including those for multiple sclerosis--are projected to rake in between $55 billion and $65 billion in 2020. That's a leap of up to 15%.

Hep C meds will also drive spending, a feather in the cap of companies such as Gilead Sciences ($GILD), Bristol-Myers Squibb ($BMY) and AbbVie ($ABBV)--and soon, Merck & Co. Antiviral hep C meds are expected to bring in $45 billion to $55 billion in 2020, or up to 10% growth, creating a mega-category in a field that was a small fraction of that size just a few years ago. About 36 million people will have taken a lifesaving hep C treatment by 2020, according to IMS estimates, a "remarkable achievement for a disease that has been intractable for decades," the company said in a statement.

Growth in emerging markets will play into the trend as more patients in developing countries latch on to new meds. IMS is predicting 24% growth in developing countries by 2020, with India, China, Brazil and Indonesia driving spending the most. China will lead the charge with $160 billion to $190 billion in spending by 2020, but the trend is expected to taper off over the next 5 years.

For those who are watching R&D, big things could lie ahead. IMS expects a "surge of innovation," with 225 new meds hitting the market by 2020, executive director Murray Aitken said in a conference call about the report. About one-third of those drugs will be focused on treating cancer, he added, presenting a lucrative opportunity to companies as they sink funds into promising therapies.

Meanwhile, cheap drugs will fuel spending, too, as volume grows worldwide. And generics will continue to take a bite out of brand sales, as patent expiries ramp up again. Biosimilars will only add insult to injury; they're expected to take a $41 billion bite out of sales as they gain ground in the market. Biosimilars will especially have an impact in Europe, where legislation already favors the meds and their adoption.

- read the report (PDF)

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