With steady growth in major markets, flourishing sales in developing countries and more than 2,000 products in clinical development, the future for global pharma looks bright. Pf examines global sales in 2005.
THE EUROPEAN pharmaceutical market outgrew its North American counterpart last year, audited sales figures for 2005 reveal.
Global sales rose 7% to $602 billion, with Europe accounting for a 7.1% increase ahead of Japan (6.8%) and North America (5.2%). However, for the first time, the UK market experienced negative growth (–2.2%).
The annual figures from IMS Health show that the most dramatic growth occurred in emerging markets such as China, Mexico and Russia, signalling an important shift in industry attention towards developing markets.
Price cuts hit UK
The decline in the UK was driven by PPRS price cuts and Category M price cuts on generics. Of the top five therapy classes (see Figure 1), only nonnarcotic analgesics grew in 2005. Sales of cholesterol regulators dropped by 20%, due as much to the fall in the generic simvastatin price as to PPRS cuts. In 2004, calcium antagonists made up the fourth-ranked therapy area by sales and ACE inhibitors ranked sixth. Both have now dropped down due to patent expiries. Equally, NSAIDs have fallen away from their previous position of eighth as a result of the Cox II scares and withdrawals.
The negative growth in the UK market for 2005 follows increases of 8% in 2004 and 11.3% in 2003. During the same three-year period, growth in secondary care outstripped that in primary care; the 2005 IMS hospital audit recorded growth of 2.2%, while primary care fell back (–3.5%). Figure 2 shows the leading UK products in each sector.
The global pattern
The ten major markets, which account for 81% of the total global pharmaceutical market, achieved a growth of just 5.7% in 2005 compared to 7.2% the previous year (see Figure 3). However, developing markets such as China, Korea, Mexico, Russia and Turkey outpaced global performance, all experiencing double-digit growth.
“As growth in mature markets moderates, industry attention is shifting to smaller, developing markets that are performing exceptionally well,” said Murray Aitken, IMS Senior Vice President, Corporate Strategy. “Many of these countries are experiencing significant GDP growth – which helps finance improvements in their healthcare systems, increases patient access, and fuels the double-digit growth we are seeing. Pharmaceutical manufacturers are working to address the unmet healthcare needs in these markets as a means to improve overall business performance.”
China, in particular, achieved an impressive growth of 20.4%, with total sales of $11.7 billion; this represents the third consecutive year in which it has achieved growth above 20%. IMS Health has predicted that China will be the world’s seventh largest pharmaceutical market by 2009.
Ray Hill, General Manager of IMS Global Consulting, commented: “The combination of a healthy economy and increasing diagnosis and treatment rates makes China extremely attractive to multinational pharmaceutical companies. Many of them are expanding their presence in China now because they recognise the significant long-term business opportunities that market presents.”
A year of innovation
So what stimulated worldwide growth? While the increasing longevity of the population, rising wealth and new applications for existing products all contributed to growth in 2005, the introduction of innovative new treatments had the greatest impact. (See Figure 4.) Last year, 40% of total market growth was fuelled by the introduction of new products, including 30 new molecular entities launched in key markets.
Notable product launches in 2005 included Byetta®, the first in a new class of medicines for improved blood sugar control in patients with Type 2 diabetes; Lunesta®, which treats insomnia, decreases sleep latency and improves sleep maintenance; and Macugen®, which treats neovascular age-related macular degeneration.
“We have seen some exceptional advances in the treatment of critical disease conditions, with many promising therapies now in Phase III clinical trials, encompassing both vaccines to prevent disease and more effective life-saving therapies,” said Murray Aitken. “For example, Gardasil® and Cervarix® promise to be effective vaccines against HPV, the cause of nearly three-quarters of the cases of cervical cancer which last year contributed to the death of more than a quarter of a million people worldwide. These and other therapies for the treatment of cancer, cardiovascular disease and diabetes will improve life expectancy and enhance patient quality of life.”
Prospects for the future are encouraging. In 2005, more than 2,300 products were in clinical development, up 9% from the 2004 level and up 31% over the past three years. A promising range of drugs are now in Phase III clinical trials or preapproval stage, including 96 oncology products, 51 products for treating cardiovascular disease, 37 for viral infections and HIV, and 28 for arthritis/pain.
2005 was also the year for blockbusters, with the number of products with sales exceeding the billion-dollar level reaching 94 (compared with only 36 in 2000) including 17 new members. While six blockbusters are expected to lose their patents in 2006, the launch of new products and the continued growth of those already on the market will result in an increasing number of blockbusters over the next five years.
A bright future for pharma?
For many pharmaceutical manufacturers, 2005 was a year of transition as they responded to cost containment challenges, regulatory setbacks and safety issues. IMS Health predicts further changes ahead. Generics, it says, will assume a more central role as patients bear a greater percentage of their own healthcare costs and payers seek to restrict the growth of healthcare expenditures, and price moderation for brands is likely as a result.
“Moderating growth in the top ten markets, along with the focus on generics as a cost-effective alternative to branded drugs, will present challenges to the pharmaceutical industry worldwide,” said Murray Aitken. “But we don’t expect these to stand in the way of pharmaceutical growth. What is critical to long-term success in the marketplace, however, is the need for payers and manufacturers to jointly strike a balance between prevention, treatment and cost containment. This is an urgent imperative with new delivery systems on the horizon to improve patient quality of life and vaccines to prevent disease.”
Despite these challenges, however, the same factors that boosted growth in 2005 will continue to play a part. It will be a combination of surging demand driven by ageing populations and successful innovation in areas of unmet need that continues to fuel the growth of the industry.
Data in this article has been kindly provided by IMS Health. Additional information is available at
www.imshealth.com
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