Total spending on medicines is projected to touch $1.5 trillion by 2021, up 33% from 2016 levels even as annual growth moderates from the record pace set in 2014 and 2015, writes Patricia Van Arnum on connect.dcat.org. The recent analysis by QuintilesIMS forecasts that the global pharmaceutical industry will grow at a compound annual growth rate of 4-7% during the next five years, down from the nearly 9% growth level seen in 2014 and 2015.
Total spending on medicines is projected to scale $1.5 trillion by 2021, up 33% from 2016 levels, but down from recent high growth rates in 2014 and 2015, citing the recent analysis by QuintilesIMS, Outlook for Global Medicines Through 2021: Balancing Cost and Value, Arnum wrote.
Medicine spending will grow at a 4-7% CAGR during the next five years, down from the nearly 9% growth level seen in 2014 and 2015. The short-term increase in growth in 2014 and 2015 was propelled by new medicines in hepatitis and cancer that contributed strongly to growth but will have a reduced impact through 2021, she writes.
The total volume of medicines consumed worldwide will rise by 3% annually through 2021, only modestly faster than population and demographic shifts. Issues of pricing, market-access pressures, lower volume growth in emerging markets, and further generic-drug incursion will contribute to the lower rate of growth, according to the analysis, Arnum writes.
Projected Global Spending
The total global spends for pharmaceuticals through 2021 will go up by $367 billion on a constant-dollar basis, according to QuintilesIMS. 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 $127 billion, or approximately 35% of the growth forecast through 2021.
Murray Aitken, senior vice president and executive director of the QuintilesIMS Institute said, "The outlook for medicine spending growth reflects a more sustainable level for health systems following the unexpectedly high growth seen in recent years. At the same time, the astonishing level of scientific advances for disease treatments inevitably will place ongoing pressure on funding for medicines—requiring value-based assessments that balance patient needs and pricing levels with competing for healthcare priorities.”
The US will account for 53% of projected growth over the next five years while China will continue as the second largest market, a position it has held since 2012, contributing 12% of the growth. Developed market spending growth will be driven by original brands while pharmerging (a term by QuintilesIMS) markets will continue to be fuelled by non-original products that make up an average 91% of pharmerging market volume and 78% of spending, she wrote.
Innovation As A Growth Driver
New drug launches will reach historically high levels in the next five years, according to the QuintilesIMS report.The firm projects that more than 2,000 drugs in the late-stage pipeline will yield an expected 45 new active substances (NAS) on average annually through 2021. The new medicines will address a wide range of disease areas, including cancer and autoimmune, metabolic, and nervous system disorders. The number of cancer treatments, their potential combinations in treatment regimens and the variety of companies involved in development will bring complexity to the patient care landscape during the next five years, says the report.
Slowing Growth In The Emerging Markets
Lower economic growth triggers slower expansion for medicine use in pharmerging markets, leading pharmerging markets have seen real growth in gross domestic product slow from 1-4 percentage points over the past decade, according to the study. This has triggered a corresponding reduction in medicine volume growth, from an average of 7% annually over the past five years to 4% forecast through 2021. China, in particular, will see a decline in annual volume growth from 17% to 4% over the same period. Overall, volume growth continues to be driven by non-original products that account for 91% of the volume in pharmerging markets. The outlook for spending growth across these markets is expected to moderate from 10% CAGR over the past five years to 6% to 9% through 2021, added the report.