What happens when the worst of the pharma patent cliff passes and new drug approvals surge? A big leap in drug spending. After a sluggish 5 years or so, global outlay on pharma products will jump by up to 30%--or $335 billion--by 2018, according to a new report from the IMS Institute of Healthcare Informatics.
Total global spending by 2018: almost $1.3 trillion. More than enough pills, injector pens and IV bags to reach to Mars.
An annual look at worldwide trends in pharma sales, the report flags the forces driving drug spending worldwide: The ongoing market grab by expensive specialty meds. Emerging markets growth, fueled by a strengthening global economy, but tempered by government pricing pressure. Fewer major patent losses. More new-and-groundbreaking drugs.
And if you want to slice and dice that further, here goes: China will still be the biggest emerging market for pharma growth, but it won't be growing as fast over the next 5 years as it did the previous 5. Specialty brands may be king in the U.S. and Europe, but worldwide, generics are where it's at. Discounts and rebates are taking a bigger bite out of sales--big enough to reduce growth by 25% over the next 5 years.
As far as good news vs. bad news for drugmakers? Depends on where you sit. If you're at cancer-drug heavyweights Roche ($RHHBY) and Novartis ($NVS)--or any of the companies building up in immuno-oncology--there's the encouraging fact that oncology drugs will surge to about $100 billion in sales by 2018. If you're Novo Nordisk ($NVO) or Sanofi ($SNY) or any other diabetes drugmaker, there's the win-some, lose-some news that volume will keep growing lickety-split, but pricing pressure and biosimilars will keep sales from surging as quickly.
If you're Gilead Sciences ($GILD), AbbVie ($ABBV), Merck ($MRK) and Bristol-Myers Squibb ($BMY), there's the we-already-knew-but-still-cool news of $100 billion in hepatitis C spending over the next 5 years.
And if you're in marketing or R&D, there's the warm, fuzzy affirmation of more good news ahead. The IMS Health report talks up a surge of innovation and a steady flow of new, potentially lucrative drug launches. That means pats on the back for research labs and plenty of work for the commercial side.
Overall, growth this year will spike, then sink a bit through 2018--but the future trajectory is still more promising for pharma than the immediate past, dominated as it was by the patent cliff. If you want to dizzy yourself with the growth prospects, go back to Mars. It's 34.8 million miles from Earth, give or take, and you can feel the size of the gap here. As you're watching space scroll by, think of a path lined by pharma products, and you'll get the idea.
- see the IMS Health release
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