Generics seen slashing global drug sales growth

Wed May 18, 2011 12:01am EDT

* Annual sales growth of 3-6 pct seen through 2015

* Slowdown from 6.2 pct avg annual growth in past 5 yrs

* Generics to provide $98 bln in savings - IMS Health

* Annual spending to double in emerging markets - study

By Ransdell Pierson

NEW YORK, May 18 (Reuters) - Global sales growth of prescription drugs could be cut in half over the next five years as lucrative brands lose patent protection and cheaper generics and emerging markets become the only significant growth drivers, according to IMS Health

"Past patterns of spending offer few clues about the level of expected growth through 2015," said Murray Aitken, an IMS Health executive whose division conducted the study.

"There are unprecedented dynamics at play, which are driving rapid shifts in the mix of spending by patients and payers between branded products and generics," said Aitken, whose company tracks prescription drug sales and trends.

Average annual sales are expected to grow 3 to 6 percent during the period, reaching nearly $1.1 trillion by 2015. But the trend reflects a slowdown from annual growth of 6.2 percent seen during the past five years, the report said.

U.S. sales will grow only 0 to 3 percent a year over the period, while sales in Europe will rise 1 to 4 percent. Spending on branded drugs is expected to be little changed in such developed markets in 2015, with growth coming instead from higher demand for cheaper generics.

A wave of new generics is approaching as an unprecedented number of big drugs lose U.S. patent protection by 2015, including Pfizer Inc's (PFE.N) $10 billion-a-year cholesterol fighter Lipitor, Bristol-Myers Squibb Co's (BMY.N) Plavix blood clot preventer and Eli Lilly and Co's (LLY.N) Zyprexa for schizophrenia.

Aitken said too few novel drugs are being approved to greatly offset lost sales of those facing the generic onslaught.

"We continue to be disappointed by the number of new chemical entities and biologics entering the market," he said.

All told, cheaper generic formulations of the maturing drugs will produce $98 billion in net savings to insurers in developed countries through 2015.

"The U.S. share of global spending will decline from 41 percent in 2005 to 31 percent in 2015, while the share of spending from the top 5 European countries will decline from 20 percent to 13 percent," the report said.

Meanwhile, it said spending will likely double over the next five years in emerging markets, to between $285 million and $315 million a year -- approaching U.S. levels.

"Seventeen high growth emerging markets, led by China, will contribute 28 percent of total spending by 2015, up from only 12 percent in 2005," the report said. It noted that growth will come primarily from generics.

Global spending on cancer drugs is expected to reach $75 billion by 2015, rising at a much slower rate than in the past five years because many newer and costly biotech treatments are already being widely used in developed markets.

But annual spending on diabetes medicines is expected to grow 4 to 7 percent through 2015, due largely to changing diets and lifestyles in developing countries that will increase the prevalence of Type II diabetes. (Reporting by Ransdell Pierson, editing by Bernard Orr)

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