The global pharma industry, in terms of worldwide prescription drug sales, is estimated to grow at ~6% CAGR and reach >$1 trillion in 2024. This is expected to be mainly driven by novel therapies, mainly biologics, in oncology, orphan drugs and gene therapy.
Geographically, USA will continue to dominate the global market space. However, the Chinese market is also expected to grow substantially. Emerging economies will remain in the spotlight due to their high growth rates.
Market trends by major countries:
USA has the highest (33%) share in global pharma revenues in 2017:
The spending on specialty medicines have increased over the past few years (2010-2017) and is almost half of the overall drug spending in USA. New treatments for multiple sclerosis, Huntington’s disease, atopic dermatitis, spinal muscular atrophy, new biologics and orphan diseases have contributed to the growth of specialty medicines in 2017.
The spending on biologics has also increased by 12.6% from 2016-17, mainly contributed by therapies for autoimmune disorders, immunology and cancer.
China’s importance in pharma industry:
Chinese pharma market has grown nearly 6 times by value in the past 13 years (2005-2017). Chinese pharma companies, historically focused on generics, have started building capabilities and making investments in innovative drugs. This can be seen in the increased investments towards drug innovation. Also, the government is implementing favorable policies to foster innovation such as faster approval rates and improved guidelines.
Europe and Japan to focus more on generics:
In Europe, generics are taking increased share of the market from 2006-2016. The key factors that drive generics are affordability, treatment guidelines, incentives/budgets for prescribers, patient co-payments and products going off patent.
The Japanese government is taking efforts to promote use of generics to reduce healthcare burden. The Government is also working to shorten its existing long regulatory processes to expedite the approval of products and improve access to novel therapeutics.
Key market trends in emerging economies:
Emerging markets represent a promising opportunity for the pharmaceutical industry. The shift towards these markets is ascribed to the large populations, increasing life expectancy, rise in prevalence of non-communicable diseases. Availability of human capital, low-cost wages, low cost of production in these countries also makes them attractive for investments. Most governments in these regions are striving to provide maximum healthcare insurance coverage.
The Indian pharma market is expected to grow due to its low cost of manufacturing, increasing exports, generics and the growing contract research and manufacturing services (CRAMS) market. Indian CRAMS market grew at a CAGR 25-30% higher than the global CRAMS market CAGR (15-16%) 2005-2010. The main drivers of this market in the future are lower manufacturing costs, rising cost of research in developed markets and increase in number of drugs going off-patent.
Mexico is increasing focus on generics by revising regulations and regulatory costs. The central objectives of the government’s pharmaceutical policy are to widen patient access to a wider and more effective range of therapeutic options. This will also help promote competition to continue reducing healthcare costs.The Mexican government has signed numerous trade agreements across 3 continents: Americas, Europe and Asia, enabling access to 1 Bn+ consumers i.e.~60% of the world’s GDP.
In Indonesia, the government’s universal healthcare scheme, Jaminan Kesehatan National (JKN scheme), already covers >70% of all Indonesians and aims to have a 100% coverage by 2019. This scheme has also led to a surge in demand for primary healthcare facilities and increased generic drug sale in Indonesia.
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