The global pharmaceutical market will grow 4%-6% this year and rise 5%-8% annually to 2014, when it will be worth $1.1 trillion, say new forecasts.

The world market will grow nearly $300 billion over the next five years, as continuing robust demand counters the ongoing effects of the economic downturn, according to the latest Market Prognosis report from research firm IMS Health.

“In developed markets with publicly-funded health care plans, pressure by payers to curb drug spending growth will only intensify, but that will be more than offset by the ongoing rapid expansion of demand in the ‘pharmerging’ markets,” forecasts Murray Aitken, senior vice president, IMS Healthcare Insight. “Net growth over the next five years is expected to be strong, even as the industry faces the peak years of patent expiries for innovative drugs introduced 10-15 years ago and subsequent entry of lower-cost generic alternatives,” he adds.

The market’s geographic balance continues to shift toward the “pharmerging” countries, notes IMS. In 2006, the firm identified seven such markets but in a new report last month it refined the list thus: Tier I - China: Tier II - Brazil, India and Russia; and Tier III - the “fast followers” - Venezuela, Poland, Argentina, Turkey, Mexico, Vietnam, South Africa, Thailand, Indonesia, Romania, Egypt, Pakistan and Ukraine.

These markets will grow 14%-17% to 2014, while the major developed markets will advance just 3%-6%. This means their aggregate growth will be similar, at about $120-$140 billion, compared to aggregate growth over the past five years of $69 billion in pharmerging markets and $126 billion in the developed markets.

The US will remain the world’s largest market, growing 3%-6% in each of the next five years and reaching $360-$390 billion in 2014, compared to $300 billion in 2009, the report forecasts.

Therapy area growth will be driven by innovation cycles and areas of unmet need, it adds. As industry R&D programmes adjust to the broad availability of cheaper generic options for many chronic conditions, growth will be higher in areas where there is significant unmet clinical need, high-cost disease burden and innovative science that can bring new treatment options. Annual growth in the areas of oncology, diabetes, multiple sclerosis and HIV/AIDS will likely exceed 10% up to 2014, as new drugs come to market, patient access is expanded and funding is redirected from other areas where lower-cost generics will be available, says IMS.

Moreover, the impact of patients shifting to generic versions of major products such as cholesterol regulators, antipsychotics and antiulcerants will reduce total drug spending by about $80-$100 billion worldwide over the period. The impact will be felt most strongly in the US; here, nearly two-thirds of the total value of patent expiries will occur and these will peak in 2011 and 2012, when six of today’s ten biggest-selling products are expected to face generic competition.

As publicly-funded health systems come under increased pressure to reduce drug budget growth in following the global economic downturn, they will apply broad spending cuts, the report suggests. Countries including Turkey, Spain, Germany and France have already announced across-the-board restrictions on access or reimbursement cuts, and other countries may take similar actions or shift more costs to patients, it notes.

In addition, while the number of New Molecular Entities (NMEs) launched in each of the next five years is likely to remain at around 30-35, payers will subject them to more rigorous and complex assessments before being accepted into clinical practice and reimbursed. In many countries, including China, Spain, Italy and Canada, funding and implementation of health care at regional or local levels is becoming more significant, and this is likely to both lengthen the time it takes for new medicines to become available to patients and contribute to lower initial spending by payers, says IMS.

“The expected global economic recovery removes an element of uncertainty for the industry over the next five years, although the way payers address lingering budget deficits will remain an issue in many markets,” says Mr Aitken. “Health system reforms, such as those to be implemented in the US, can spur fundamental change in the market, but the full impact may not be felt until the latter half of this decade. Leading up to 2020, IMS expects to see a continuing shift toward biopharmaceuticals, specialty-driven products and changes in the mix of disease areas of interest,” he adds.