News

Posted On: 10/26/2005

Report Forecasts 6 to 7 Percent Growth for Global Pharma Market in 2006

PharmaManufacturing.com

By Business Wire

IMS Health (Fairfield, Conn.), a worldwide provider of information solutions to the pharmaceutical and healthcare industries, announced Oct. 26 that it expects global pharmaceutical market growth to remain flat in 2005 at 7-8 percent, and is forecasting 6-7 percent growth in 2006, with total market size reaching U.S. $640-650 billion.

"Several key market events are expected to shape the pharmaceutical industry in 2006," said Murray Aitken, senior vice president, Corporate Strategy, IMS Health. "These include the introduction of the Medicare drug benefit in the U.S., expected patent loss and generic introduction for six blockbuster products, and continued efforts by local governments to reduce drug spending and manage patient access to branded pharmaceuticals. While some pharmaceutical companies are taking the necessary steps to address these areas, others must start planning now to ensure continued growth and success."

Regional Forecasts

The U.S. market, which accounts for 43 percent of pharmaceutical sales worldwide, will continue to fuel growth in 2006. IMS forecasts the U.S. market to grow at an 8-9 percent pace, up from an expected growth of 6-7 percent in 2005. Increased access by U.S. seniors to lower-cost medications through Medicare Part D, and a rebound from the impact of Cox-2 product recalls and safety issues will help support this higher level of growth.

Growth for the five major European markets — France, Germany, Italy, Spain and the United Kingdom — is forecast to be 4-5 percent in 2006, down slightly from this year. Expansion of the reference price system and mechanisms to encourage generics use are expected to impact growth. This will be partially offset by the higher spending on public health and disease awareness programs and the launch of innovative products. While there is a slight downturn among the major European countries, the largest markets in Central and Eastern Europe can expect double-digit growth in 2006 as healthcare systems are modernized and GDP growth helps finance increasing demand.

The Japan market will experience a downturn in 2006, with forecasts showing from 0-1 percent growth, down from 5-6 percent growth expected in 2005. This reflects the impact of restrictive National Health Insurance (NHI) reimbursement listing and biennial price cuts.

China continues to emerge as a significant market. Growth will remain robust at 17-18 percent and the market size will reach $13-14 billion in 2006. Strong economic growth and the continued implementation of the national reimbursement drug list will sustain high market growth, offset somewhat by price cuts and tighter cost-containment measures.

Therapeutic Classes

Among the major therapy classes, oncology will register the highest global growth rate of 17-18 percent in 2006, fueled by the rapid uptake of some recently launched breakthrough products that include Avastin, Erbitux, Alimta and Tarceva, and increased patient access to these innovative treatments. The statins class will show growth of 7-8 percent despite the increasing availability of generic forms, as evidence of their efficacy and as clinical guidelines expand the potential patient population that would benefit from these treatments. Above-average growth is also expected in the angiotensin-II, platelet aggregation inhibitors and osteoporosis classes, fueled by the uptake of new products and availability of new clinical evidence.

Manufacturer Implications

Pharmaceutical manufacturers must take decisive action in a number of areas to respond to the changes in market conditions and shifts in their product portfolios. These actions include:

• reassessing sales and marketing spend levels and practices;
  
  
• accelerating safety surveillance efforts;
  
  
• investing in health outcomes and pharmacoeconomic studies to prove the value of medications; and
  
  
• pursuing growth in emerging markets such as China, Latin America and Eastern Europe.

"Collectively, the pharmaceutical industry must continue its efforts to enhance its public image and demonstrate its commitment to the advancement of healthcare," said Aitken. "The pharmaceutical industry must carefully consider how to adapt its business model to sustain growth worldwide. Market conditions are changing, the governments' span of control is growing, and future success will only be achieved by those manufacturers with innovative products, demonstrable cost-effectiveness, and productive, evidence-based sales and marketing approaches."

About the Forecast

In forecasting 2006 market performance, there are a number of less predictable events that may impact overall growth, including major safety events resulting in product withdrawal or prescribing restrictions; shifts in regulatory approval standards from their current levels; actions to apply sudden cuts to drug spending levels; and public health crises, such as the avian flu.

Figures are derived from IMS Market Prognosis, a strategic market forecasting publication that evaluates the impact of key issues on the pharmaceutical and healthcare industries. Therapeutic level forecasts are derived from IMS Therapy Forecaster, a unique forecasting system based on detailed quantitative and qualitative methodologies. Additional analyses have been applied by IMS consulting and forecasting experts. Growth is measured in constant dollars to avoid the influence of currency exchange rates; sales are calculated at the ex-manufacturer level.

Additional information is available at www.imshealth.com.