The UK branded pharmaceutical market looks set to decline from 2009 onwards as the volume of drugs remains flat but prices are cut, predicts a recent report by market analyst Datamonitor.

According to the report, the UK branded pharmaceutical market is already under considerable pressure with more than 87% of all prescriptions currently dished out for generic drugs, a number set to swell with the looming loss of patent protection on many top-selling drugs and when generic substitution becomes mandatory in 2010.

An additional threat, Datamonitor says, is posed by the introduction of biosimilars - generic copies of biologic drugs - to the UK market, designed to offer a cheaper alternative to their branded counterparts. “While uptake may initially be slow, it will inevitably grow, driven by the need to cut healthcare costs coupled with growing physician and patient confidence in the drugs over time,” explained Mr Sinclair, pharmaceutical strategy senior analyst at Datamonitor.

These pre-existing challenges are now also being “exacerbated” by the ailing global economy, the report says. Just last week, chancellor Alistair Darling announced that the National Health Service is expected to save £2.3 billion during 2010-11, in response to the current difficult economic climate, part of which will have to come from a cutback on drugs spend.

As part of this, the report points out, £550 million will be saved from branded drug price cuts as per the freshly negotiated Pharmaceutical Price Regulation Scheme, which came into play in February this year with a 3.9% shaving off prescription drug prices. Furthermore, an additional 1.9% reduction in 2010 could even see savings beat the government’s target, while further shrinking overall branded drug sales.

Ups and downs
On the plus side, Datamonitor points out, prices will rise again by 0.1% in 2011 and 0.2% in each of the following two years, and, as additional sweeteners, the government has introduced a flexible pricing scheme to reward innovation, assist in the uptake of cost-effective new medicines and buffer the price cuts, as well as a new Strategic Investment Fund to support promising projects considered to be strategically important.

All-in-all, however, the “multitude of negative factors facing the industry” coupled with “the volume of branded drugs having remained flat over the last four years” will likely cause a downturn in revenue for UK branded pharmaceutical industry from next year, Sinclair concludes.