After several years of slowing growth, the global medicines market is poised to rebound from an expected low of 3%-4% growth in 2012 to 5%-7% in 2016, according to the IMS Institute for Healthcare Informatics.
Annual global spending on medicines will rise from $956 billion in 2011 to nearly $1.2 trillion in 2016, increasing by an average 3%-6% a year, says the Institute, in a new report. Annual global spending growth will more than double by 2016 to as much as $70 billion, up from a $30 billion pace this year, driven by volume increases in the "pharmerging" markets and an uptick in developed nations, it says.
Patent expiries (peaking this year) and increased cost-containment actions by payers will constrain spending on branded medicines to 0%-3% worldwide to 2016. At under 1% ($3 billion), developed markets are expected to experience their lowest annual growth this year, but then rebound to annual growth of $18-$20 billion for 2014-16.
"As health systems around the world grapple with macrocosmic pressures and the demand for expanded access and improved outcomes, medicines will play an even more vital role in patient care over the next few years," comments IMS Institute executive director Murray Aitken.
The report identifies a number of market dynamics to 2016, including slow growth in drugs spending by developed economies’ health systems, rising just $60-$70 billion during 2011-16 following a $104 billion rise in 2006-11.
Despite the highest-ever number of patent expiries, US drug spending will grow $35-$45 billion over the next five years, averaging 1%-4% a year as newer medicines that address unmet needs are introduced and patient access expands in 2014 due to implementation of President Obama's Affordable Care Act (ACA).
In Europe, annual growth will be 1%-2% due to significant austerity programmes and cost-containment initiatives, while the Japanese market will grow 1%-14% a year, slightly lower than during the previous five years and reflecting biennial price cuts scheduled for 2012, 2014 and 2016.
Overall, patent expiries in developed markets will yield a five-year "patent dividend" of $106 billion, reflecting reduced brand spending of $127 billion offset by $21 billion in higher generics spending, says the IMS Institute.
In contrast, pharmerging markets’ health systems will nearly double their medicines spending over the period, from a total $194 billion in 2011 to $345-$375 billion by 2016, or $91 in drug spending per capita, the study forecasts. The growth drivers will be rising incomes, continued low costs for drugs and government-sponsored programmes designed to increase access to treatments by limiting patients' exposure to costs and encouraging greater use. Generics and other products including over-the-counter (OTC) medicines, diagnostics and non-therapeutics will account for approximately 83% of the increase, it says.
The branded drugs market will experience flat-to-3% annual growth to 2016, reaching $615-$645 billion, up from $596 billion in 2011, the report adds. In the major developed markets, such growth will be severely constrained, at only $10 billion to 2016, due to patent expiries, increased cost-containment efforts by payers and modest spending on newly-launched products.
The pharmerging markets are expected to contribute $25-$30 billion in branded product growth to 2016, while off-invoice discounts and rebates will offset about $5 billion of these products' growth, it forecasts.
However, manufacturers of small-molecule generics will experience accelerating growth. Global generic spending will rise from $242 billion in 2011 to $400-$500 billion by 2016, fuelled by volume growth in pharmerging markets and the ongoing transition to generics in developed nations, says the study. It expects the impact of patent expiries to be primarily felt in the US, while in Europe, limited savings from expiring patents are prompting policy shifts to encourage greater use of generics and lower reimbursement for them.
There will also be wider treatment options as more new medicines are launched. 32-37 global launches of New Molecular Entities (NMEs) are expected each year to 2016 – a total of 160-185 compared to 142 during 2007-11, the study notes. Innovative therapies to extend or improve quality of life are anticipated in the treatment of Alzheimer's, autoimmune diseases, diabetes and some cancers and orphan diseases, while treatments for global priority diseases such as malaria, tuberculosis and neglected diseases are expected to improve, although gaps will remain.
Finally, the IMS Institute expects biologics manufacturers to benefit from expanding market opportunity. Biologics are projected to account for about 17% of total global spending on medicines by 2016, as important clinical advances continue. Seven of the top 10 (by spending) global medicines will be a biologic within five years, and adoption of biosimilars will remain limited, as the original biologic products remain protected by patents or market exclusivity in many countries, it notes.