Spending on medicines will rise 30% over the next five years, ballooning to $1.3 trillion in 2018, as about 200 new drugs come to market, patent-cliff expirations ebb, and demand grows worldwide—especially for newer specialty treatments in cancer and hepatitis C, a report by the IMS Institute for Healthcare Informatics has concluded.
“Global Outlook for Medicines Through 2018,” released yesterday, predicted a $70 billion spending increase this year, with worldwide spending set to crack the trillion-dollar mark as a result. The size of that increase dwarfs the $44 billion jump of 2013, a year that saw spending rise to $989 billion, the report said.
Between 2013-2018, the IMS Institute report added, total global spending for pharmaceuticals will increase by $305–335 billion on a constant-dollar basis—a compound annual growth rate of 4% to 7%—compared to $219 billion during the past five years.
Spending is measured before adjusting for rebates, discounts, taxes, and other adjustments that affect net sales received by manufacturers. These factors are expected to reduce growth by $60–80 billion, or approximately 25% of the growth forecast over the next five years, IMS Institute added.
“The higher level of spending growth we’re projecting over the next five years reflects an unusual combination of higher spending on the surge of innovative medicines for patients and lower savings from patent expiries,” said Murray Aitken, IMS Health senior vice president and executive director of the IMS Institute for Healthcare Informatics.
That will be evident, he added, this year and next in developed countries—especially in the U.S., which accounts for the largest share of the global market, 37% in 2013. During the five year period measured by the report, Asia’s share is of the global drug market is predicted to grow the fastest, from 29% in 2013 to 36% in 2018.
Asia and other emerging markets will spend 50% more on medicines in 2018 compared with 2013, the report said, as such countries advance their economies resulting in rising incomes, broaden access to treatments, and expand their universal healthcare programs. More than 80% of the forecasted spending growth is projected to be for generic drugs and biosimilars. Much of Asia’s growth reflects continued growth in China—the world’s second largest pharmaceutical market behind the U.S.—which is expected to reach a 2018 spending range of between $155 billion and $185 billion.
Developed countries, according to the IMS Institute, will see strong sales growth this year and next, driven by fewer patent expiries, the launch of new medicines and price increases. That growth will moderate over the following three years in France, Germany, Spain, U.K., and Italy as cost-containment measures further limit price levels. For those countries and the rest of Europe, drug spending will be constrained by weak economic recoveries, continued low population growth, and ongoing government spending cuts, including in medicines and universal healthcare.
But the spike will likely continue for the U.S. and Japan through 2018, the report said. The U.S. increase, according to IMS Institute, reflects the economy’s steady but slow recovery, as well as the Affordable Care Act.
The report also cited two other factors in its projection for increased drug spending:
- Specialty medicine boom—Nearly half (40%) of the total increase in spending expected between 2013–18 will be in new specialty medicines, especially with oncology, autoimmune, respiratory, anti-viral, and immunosuppressant therapy indications. Cancer drug spending alone will climb to about $100 billion in 2018, up from $65 billion last year, according to IMS Institute.
- New molecular entities (NMEs)—About 200 NMEs are expected to be launched over the next five years, in part reflecting speedier reviews through FDA’s Breakthrough Therapy Designation program. More than 2,000 treatments are now in late stages of clinical development, with one-fourth of those being oncology therapies, the report said.