Emerging Markets Bright Spot of Growth for Pharmaceuticals

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The global pharmaceutical market is expected to grow between 5 and 7 percent in 2011 to $880 billion, up from 4 to 5 percent. But the increase is largely driven by robust growth in emerging markets such as China, which is now the world’s third largest pharmaceutical market, a new report finds.

The report from IMS Health expects China to grow between 25 and 27 percent to reach more than $50 billion in 2011. That contrasts with major European markets of Germany, France, Italy, Spain and the United Kingdom, which collectively will grow at an anemic 1 to 3 percent. Sales of drugs in the United States are expected to reach between $320 and $330 billion in 2011, a 3 to 5 percent increase.

The 17 emerging countries tracked by IMS are forecast to grow at a rate of 15 to 17 percent in 2011, to between $170 and $180 billion. Many of these markets are benefiting from greater government spending on healthcare and broader public and private healthcare funding, which is driving greater demand and access to medicines.

“While the overall market will appear to rebound somewhat in 2011, the underlying constraints to growth in developed markets are stronger than ever – including the impact of major patent expiries and payer mechanisms to limit drug spending,” says IMS Senior Vice President Murray Aitken.

In 2011, products with sales of more than $30 billion are expected to lose patent protection and could face competition from generics. In the United States, Lipitor, Plavix, Zyprexa, and Levaquin – which together generated more than $17 billion in total sales – likely will lose market exclusivity. But IMS Health says the full impact of patients shifting to lower-cost generic alternatives for these products, as well as other brands in their therapy classes, mostly will be felt in 2012.

No doubt Big Pharma will look to emerging markets for opportunities to offset the loss of revenue to generic competition, but it won’t be easily done. The pricing pressures and generic competition that is new in developed markets, is a fact of life in the emerging countries.

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