Spike in Growth in 2014-15 Driven by Innovation Surge and Few Patent Expiries
PARSIPPANY, NJ, November 20, 2014 – More specialty drug innovation, greater patient access to medicines and reduced impact from patent expiries will be the primary drivers of an increase in global medicine spending of up to 30 percent by 2018. The increase in annual spending will spike this year when absolute growth will be about $70 billion, up from $44 billion in 2013 and $26 billion in 2012, according to new research released today by the IMS Institute for Healthcare Informatics.
The report, The Global Outlook for Medicines Through 2018, found that the total global spend for pharmaceuticals will increase by $305-335 billion on a constant-dollar basis, compared to $219 billion during the past five years. Global spending is forecast to grow at a 4-7 percent compound annual rate over the next five years, with most countries experiencing an increase in drug expenditure per capita. Spending is measured at the ex-manufacturer level before adjusting for rebates, discounts, taxes and other adjustments that affect net sales received by manufacturers. The impact of these factors is estimated to reduce growth by $60-80 billion, or approximately 25 percent of the growth forecast over the next five years.
"The higher level of spending growth we're projecting over the next five years reflects an unusual combination of higher spending on the surge of innovative medicines for patients and lower savings from patent expiries," said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics. "This is particularly evident this year and next in developed countries—and especially in the U.S., which accounts for more than a third of the global market."
In its latest study, the IMS Institute highlights the following findings:
- Growth in spending in developed markets will spike in 2014-15. This year, developed markets are seeing strong growth due to fewer patent expiries, the launch of innovative medicines and price increases. The greater contribution to growth from developed countries through 2018 is being led by the U.S. and Japan, with France, Germany, Spain, U.K. and Italy maintaining relatively low growth levels. While these markets will moderate as cost-containment measures further limit price levels, rising volumes will continue to contribute to overall market growth.
- Spending on medicines in pharmerging markets will rise more than 50 percent over the next five years. The 21 pharmerging countries that now account for 25 percent of global spending on medicines will continue to broaden access to treatments as their economies expand and governments advance efforts to provide universal health coverage. More than 80 percent of the forecasted growth in drug spending will be for non-branded medicines, including greater use of biologic therapies. China, already the world's second largest pharmaceutical market, will reach spending levels of $155-185 billion in 2018. Implementation of health reforms is increasing demand for medicines, while pricing regulations are being used more frequently to manage overall growth levels.
- Specialty medicines will contribute a projected 40 percent of total global spending growth through 2018. Higher spending on specialty medicines is expected over the next five years, particularly in developed markets. Much of this growth is from medicines bringing new treatment options to patients, including breakthrough therapies or even cures that often reduce complications or hospitalizations while improving outcomes. Advances will be particularly notable in the oncology, autoimmune, respiratory, anti-virals and immunosuppressants therapy areas. The surge in cancer drug innovation in recent years will continue and contribute to global spending on all oncology drugs—reaching about $100 billion in 2018, up from $65 billion last year. The introduction and uptake of potent new medicines for treating Hepatitis C are expected to result in about $100 billion in total spending over the five-year period ending 2018.
- Nearly 200 new drugs are forecast to be launched in the next five years. A high number of new molecular entities (NMEs) are expected to be launched annually, continuing a second wave of innovation similar to levels seen in the mid-2000s. More than 2,000 products are currently in late-stage clinical development, of which oncology therapies make up fully one-fourth of the pipeline. The growing number of medicines receiving the U.S. Food & Drug Administration's Breakthrough Therapy Designation is contributing to an acceleration of approvals. The availability of new medicines to patients around the world, however, varies significantly by country and disease: on average, fewer than half of the medicines initially launched over the prior five years are available across the major developed markets.
The full report, including a detailed description of the methodology, is available at www.theimsinstitute.org. It can also be downloaded as an app via iTunes at
https://itunes.apple.com/app/ims-institute/id625347542. The study was produced independently as a public service, without industry or government funding.
About the IMS Institute for Healthcare Informatics
The IMS Institute for Healthcare Informatics provides key policy setters and decision makers in the global health sector with unique and transformational insights into healthcare dynamics derived from granular analysis of information. It is a research-driven entity with a worldwide reach that collaborates with external healthcare experts from across academia and the public and private sectors to objectively apply IMS Health's proprietary global information and analytical assets. More information about the IMS Institute can be found at: http://www.theimsinstitute.org.
About IMS Health
IMS Health is a leading global information and technology services company providing clients in the healthcare industry with comprehensive solutions to measure and improve their performance. By applying sophisticated analytics and proprietary application suites hosted on the IMS One intelligent cloud, the company connects more than 10 petabytes of complex healthcare data on diseases, treatments, costs and outcomes to help its clients run their operations more efficiently. Drawing on information from 100,000 suppliers and on insights from more than 45 billion healthcare transactions processed annually, IMS Health's approximately 10,000 employees drive results for healthcare clients globally. Customers include pharmaceutical, consumer health and medical device manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community. Additional information is available at www.imshealth.com.
As a global leader in protecting individual patient privacy, IMS Health uses anonymous healthcare data to deliver critical, real-world disease and treatment insights. These insights help biotech and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders to identify unmet treatment needs and understand the effectiveness and value of pharmaceutical products in improving overall health outcomes.
Analyses conducted for The Global Use of Medicines: Outlook through 2018 report are based on IMS Health audits and include all types of biopharmaceuticals, including biologics, OTC, and traditional medicines distributed and administered through regulated delivery systems such as pharmacies, hospitals, clinics, physician offices, and mail order, where applicable. Spending figures are derived from IMS Market Prognosis™ and are reported at ex-manufacturer estimated prices that do not reflect off-invoice discounts and rebates. IMS MIDAS™, Lifecycle™ R&D Focus, Lifecycle™ New Product Focus, PharmaQuery™, Market Prognosis™ and Therapy Prognosis™ were also used for assessing worldwide healthcare markets, therapy class and product dynamics and country-level pricing and reimbursement complexities. More detail on information sources is included in the report. Developed markets are defined as the U.S., Japan, Top 5 Europe countries (Germany, France, Italy, Spain, U.K.), Canada and South Korea. Pharmerging countries are defined as those with greater than $1 billion in absolute spending growth over 2013-18 and that have GDP per capita of less than $25,000 at purchasing power parity: China, Brazil, Russia, India, Mexico, Turkey, Venezuela, Poland, Argentina, Saudi Arabia, Indonesia, Colombia, Thailand, Ukraine, South Africa, Egypt, Romania, Algeria, Vietnam, Pakistan and Nigeria.