Global spending on medicines to increase to US$1.3 trillion by 2018, forecasts IMS
2014–15 will see a growth spike driven by an innovation surge and few patent expiries
More innovation in speciality drugs, greater patient access to medicines and fewer patent expiries will be the primary drivers of an increase in global medicine spending of up to 30% to US$1.3 trillion by 2018.
Growth this year will be about US$70bn, up from $44 billion in 2013 and $26bn in 2012, according to new research by the IMS Institute for Healthcare Informatics (IMS).
The report, The Global Outlook for Medicines Through 2018, found that the total global spend for pharmaceuticals will increase by $305–$335bn on a constant-dollar basis, compared with $219bn over the past five years.
Global spending is forecast to grow at a 4–7% compound annual growth rate (CAGR) 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–$80bn, or approximately 25% of the growth forecast over the next five years, said the study.
'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 SVP and Executive Director.
The higher level of spending growth reflects an unusual combination of higher spending on the surge of innovative medicines and lower savings from patent expiries
'This is particularly evident this year and next in developed countries – and especially in the US, which accounts for more than a third of the global market.'
The US and Japan will make the greater contribution to growth from developed countries to 2018, with France, Germany, Spain, UK and Italy maintaining relatively low growth levels. While these markets will moderate as cost-cutting measures further limit price levels, rising volumes will continue to contribute to overall market growth, the report said.
Spending on medicines in emerging markets will rise by more than 50% over the next five years. The 21 emerging pharmaceutical countries that now account for 25% of global spending on medicines will continue to broaden access to treatments as their economies expand and their governments advance efforts to provide universal health coverage.
More than 80% of the forecasted growth in drug spending will be for non-branded medicines, including greater use of biologics. China, already the world's second-largest pharmaceutical market, will reach spending levels of $155–$185bn in 2018. Implementation of health reforms is increasing demand for medicines, while pricing regulations are being used more frequently to manage overall growth levels, the report found.
Specialist medicines will contribute a projected 40% of total global spending growth by 2018. Higher spending on these medicines is expected over the next five years, particularly in developed markets. Much of this growth will be from breakthrough therapies or cures that reduce complications or hospitalisations while improving outcomes. Advances will be most notable in the oncology, autoimmune, respiratory, anti-virals and immunosuppressants therapy areas.
The surge in cancer drug innovation in recent years will continue
The surge in cancer drug innovation in recent years will continue and contribute to global spending on all oncology drugs – reaching about $100bn in 2018, up from $65bn in 2013, the report said. The introduction and uptake of potent new medicines for treating Hepatitis C are expected to result in about $100bn in total spending over the five-year period to 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 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 a quarter of the pipeline. The growing number of medicines receiving the US Food & Drug Administration's Breakthrough Therapy Designation is contributing to an acceleration of approvals. But the availability of new medicines to patients 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.
