Drugs Sales Growth Expected to Slow

Posted 27 May 2011 in Healthcare Professionals

A recent report by IMS Health shows that the changes to spending on prescription drugs will be significant over the next few years.  This is due to a number of factors including the worldwide recession and the impetus to cut the cost of healthcare spending across the globe.

IMS Health in a recent report states that worldwide spending on prescription drugs will slow in the next five years but will still surpass $1 trillion by 2014.  Spending will rise 3% to 6% per year through 2015, with much of the growth coming in China, Brazil, Russia and India. By 2015, almost half of all pharmaceutical spending will go to low-cost generic drugs instead of costlier brand-name medications - which were once responsible for an overwhelming majority of drug costs. That's because the patents on many top-sellers will expire in the next few years.

As generic drugs cost much less, they are seen as a critical way to keep health care costs in check. IMS said the drugs will save $98 billion for payers in developed countries over the five years ending in 2015, or almost double the $54 billion in savings for the five years that ended in 2010.

In 2010, worldwide drug spending was $865 billion and U.S. spending was $310.6 billion and IMS said that figure will be between $320 billion and $350 billion in 2015.

In recent years, countries like China, Japan, Spain and Italy instituted price controls or cut the prices of generic and off-patent products. Some of those policies were created in the wake of the global economic crisis. The U.S., meanwhile, plans to expand health insurance coverage to millions of uninsured people through the Patient Protection and Affordable Care Act of 2010, and generic drugs are critical to cost-saving.

IMS is predicting slightly slower growth than it did a year ago. Last year, the firm said worldwide spending would reach almost $1.1 trillion in 2014, with spending growing 5% to 8% a year. That's because of greater use of generic drugs. Lower spending in the U.S. because of the weak economy and tighter scrutiny by the Food and Drug Administration also is contributing to the decline.

The U.S. will remain the largest single pharmaceutical market, however, with spending almost triple that of Japan and China, and spending in the U.S., Japan, and Western Europe won't change much, according to IMS. But by 2015, the BRIC countries - Brazil, Russia, India and China - and other growing pharmaceutical markets will spend more than the five biggest markets in Europe - Germany, France, Italy, Spain and the U.K. Spending in China is expected to roughly triple, to $115 billion to $125 billion from $41 billion last year.

IMS said more will be spent on cancer drugs than in any other category, but growth in that spending will slow. Spending on diabetes therapies will grow as the disease becomes more prevalent in developed and emerging markets and newer drugs reach the market.

But IMS does not expect generic versions of biotech drugs to make much of an impact by 2015: It said about $2 billion will be spent on those drugs by 2015, while $200 billion will be spent on biotech drugs worldwide.