April 20, 2010 / 1:58 PM / in 9 years

Global drug sales to top $1 trillion in 2014: IMS

NEW YORK (Reuters) - Global pharmaceutical sales are expected to reach $1.1 trillion in 2014 as growth in emerging markets helps offset the impact of generic competition for many of the world’s top selling drugs, according to a forecast by IMS Health.

The 5 percent to 8 percent compound annual growth rate for prescription drugs expected over the next five years translates into sales growth of nearly $300 billion, IMS said.

“What’s a little surprising is how robust we expect the growth to be notwithstanding we’re going to be passing through the peak years of loss of (patent) exclusivity,” Murray Aitken, senior vice president of IMS Healthcare Insight, said in an interview.

“That really is a reflection of how much the global market has moved away from dependence on five or six major developed markets,” Aitken said.

Worldwide pharmaceutical sales growth of 4 to 6 percent is expected this year, which is in line with the previous forecast by IMS, a leading provider of prescription drug data. But that represents a decline from the 7 percent growth to $837 billion seen in 2009.

Factors contributing to slower growth in 2010 are a larger impact from U.S. patent expirations, price cuts in Japan — the world’s second-largest market — which will bring growth there down to 0 to 2 percent from 7 percent growth in 2009, and the effect in Europe of publicly funded healthcare budgets being cut, Aitken explained.

Products with sales of more than $142 billion are expected to face generic competition in major markets over the next five years, reducing prescription drug spending by $80 billion to $100 billion through 2014.

Patent expirations in the United States will peak in 2011 and 2012, when six of the 10 current largest-selling products are expected to face generic competition, including the top two: Pfizer Inc’s cholesterol fighter Lipitor and the blood clot preventer Plavix, sold by Bristol-Myers Squibb Co and Sanofi-Aventis.

Branded drugs quickly lose some 90 percent of sales when faced with competition from much cheaper generic versions.

Somewhat offsetting the pinch from generic competition will be the double-digit sales growth expected in emerging markets.

Drug sales in emerging markets, led by China and Brazil, are expected to grow at a 14 to 17 percent pace through 2014, compared with a 3 to 6 percent growth rate seen for developed markets, IMS said.

Total sales in emerging markets through 2014 are expected to be about $120 billion to $140 billion, compared with sales of $69 billion over the past five years.

“China remains in league of its own with 22 to 25 percent annual growth through 2014. That works out to be absolute growth of about $60 billion to $80 billion,” Aitken said. “Brazil is second-largest at 12 to 15 percent growth.”

Despite an anemic 3-6 percent growth rate, the United States will remain the world’s largest market for prescription medicines with sales reaching $360 billion to $390 billion in 2014, up from $300 billion last year, IMS said.

As generic options dominate chronic therapeutic areas such as cholesterol control, antipsychotics, and acid reflux and ulcer preventers, drugmakers will turn their research budgets toward therapy areas where higher cost drugs tackle diseases with high levels of unmet need, such as cancer, multiple sclerosis and diabetes, IMS predicted.

But, IMS cautioned, some of those expensive new drugs may meet with resistance from payers in many countries, with more rigorous and complex assessments likely before they are accepted into clinical practice and reimbursed.

That is expected to extend the time it takes for new medicines to become available to patients, and may contribute to lower initial spending by payers, IMS said.

“The expected global economic recovery removes an element of uncertainty for the industry over the next five years, although the way payers address lingering budget deficits will remain an issue in many markets,” Aitken said.

That said, “this will be a trillion dollar-plus market in 2014 as patient demand for pharmaceuticals remains as strong as ever and stronger than ever in the emerging markets,” he said.

Reporting by Bill Berkrot, editing by Matthew Lewis

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