6

GLOBAL SPENDING ON MEDICINES

Most countries will experience an increase in

pharmaceutical spending per capita by 2018
Pharmaceutical
spending per capita, 2013 versus 2018
1,600

Pharmaceutical Spend per Capita

1,400
1,200
1,000
800
600
400
200

a
di
In

a
in
Ch

y
ke
Tu
r

ex
ico
M

il

ia
ss
Ru

Ko
So

ut

Br
az

re
a

UK

n
ai
Sp

ly
Ita

ce
Fr
an

an
y
rm
Ge

ad
Ca
n

n
pa
Ja

US

2013

2018

Source: Economic Intelligence Unit, 2014; IMS Market Prognosis, September 2014

Growth in the U.S. market will remain strong,

disproportionate to its population growth; this is

driven by fewer patent expiries than in previous
years, innovative product launches and rising
prices.

Despite high growth in pharmerging

countries, there remains a large difference in

pharmaceutical spending per capita versus
developed markets.

Only France and Spain will see a contraction of

pharmaceutical spend per capita in 2018, due to

policies intended to control spending growth.

Highest growth is anticipated in China, where per

capita spending is anticipated to grow by over
70% in the next five years.

As the second largest market in the world, Chinas

spend is expected to be just 9% per capita of that
in the U.S.

Chart notes:
Spending used to calculate spend per capita in US$ at actual and forecasted variable exchange rates.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

GLOBAL SPENDING ON MEDICINES

Annual global spending growth will spike in 2014-2015

and moderate through 2018
Global growth, 2009-2018
2009-13 Growth $219Bn

2014-18 Growth $305-335Bn

Absolute Growth Const US$Bn

70
60
50
40
30
20
10
0
-10

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Forecast
Pharmerging

Developed

Rest of world

Source: IMS Market Prognosis, September 2014

In 2014, developed markets will see strong

growth due to fewer patent expiries, the launch

of innovative medicines and price increases.

The increased contribution to growth from

developed countries seen through 2018 is led by

the U.S. and Japan, with EU5 (Germany, France,
Italy, Spain and U.K.) maintaining relatively low
levels of growth.

Growth in developed markets will moderate;

with patent expiries and pharmaceutical costcontainment measures expected to limit prices,
rising volumes will be a significant contributor to
overall market growth.

Largely driven by China, which represents 46% of

the pharmerging market, growth in pharmerging
markets will continue, driven by improved access
and population increases, but will moderate in
the latter years of the forecast.

Chart notes:
Developed: U.S., Japan, Germany, France, Italy, Spain, U.K., Canada, South Korea. Pharmerging: China, Brazil, Russia, India, Algeria, Argentina, Colombia, Egypt,
Indonesia, Mexico, Nigeria, Pakistan, Poland, Romania, Saudi Arabia, South Africa, Thailand, Turkey, Ukraine, Venezuela, Vietnam.
Absolute growth in constant US$, excludes the impact of exchange rate changes, which are expected to have approximately -$18Bn impact by 2018.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

GLOBAL SPENDING ON MEDICINES

Off-invoice rebates and discounts will reduce net

manufacturer sales growth by approximately 25%
Global market growth moderated by rebates 2009-2013 and 2014-2018

$290-320Bn

$194Bn

$60-80Bn

$220-250Bn

$63Bn
$132Bn

2009-2013

Sales growth

2014-2018

Rebate and discount growth

Net sales growth

Source: IMS Market Prognosis, September 2014: IMS Institute for Healthcare Informatics, October 2014

Off-invoice discounts and rebates moderate the

growth of the global market through 2018 but are

not reflected in IMS forecasts; the global CAGR
net of discounts and rebates is estimated to be
0.5% lower than IMS forecast.

Cost-containment policies in developed and

pharmerging markets alike are increasingly

driving price concessions, often through offinvoice discounts and rebates.

Increases in negotiated discounts are

counteracting list price increases, and

populations aging into public pay systems may
have a higher level of negotiated rebates.

Influencing this trend are government-mandated

rebates and new caps instituted on total levels of
public drug spend combined with manufacturer
payback arrangements in some countries.

Price concessions for branded products are

expected to increase through 2018 and those for

generics also are expected to grow as generics
companies compete with increasing intensity.

Chart notes:
Estimated net spending adjustment is based on a comparison of company-reported net sales and IMS-reported sales in the U.S., and investigation and modeling
of government-mandated or commercially driven supply chain discounts and rebates in other countries. IMS estimates of total spending are based on IMS audits,
most often collected at invoice prices from wholesaler transactions and which do not reflect off-invoice discounts and rebates in most markets.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

10

GLOBAL SPENDING ON MEDICINES

Global spending growth will peak in 2014 at 7%, 4-7%

CAGR through 2018
Global spending and growth, 2009-2018

1,400

14%

1,200

12%

1,000

10%

800

8%

600

6%

400

4%

200

2%

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Growth Const US$%

Spending US$Bn

2014-18 CAGR, 4-7%

0%

Forecast
Sales

Growth

Source: IMS Market Prognosis, September 2014

Global growth will peak at 7% in 2014, the

highest growth since 2004 when it was 7.7%.

Strengthening of the global economy, fewer

patent expiries in developed markets, new

medicines and growth in pharmerging markets
will contribute to a CAGR of 4-7% through 2018.

Growth will peak in 2014, driven predominately

Price increases, mostly in the U.S., contributed to

growth in 2014, driven by some specific products

and therapy areas where list price increases
were above historic norms, and are expected to
moderate through the rest of the forecast back
to historic levels and be offset by off-invoice
discounts and rebates, which are not reflected
here.

by the U.S. market, which is forecast to grow

11-13% in 2014 and moderate to 5-8% CAGR
through 2018.

Chart notes:
Chart shading indicates forecast, and forecasted growth shows point forecast and high-low ranges. Spending includes retail pharmacy, mail-order, long-term care
and institutional drug spending tracked by IMS audits. Total market sales forecasts take into account the audited sales as well as any distribution channel not
audited by IMS Health. The unaudited share of the market is assumed to remain constant for the duration of the forecasting period.
Spending in US$ with variable exchange rates. Growth in US$ at constant exchange rates.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

18

KEY COUNTRIES

North America continues to contribute the largest

proportion to growth, but Asia is gaining
Geographic distribution of medicine spending
Spending

Source of Growth

2013

2018

2013-18

$989Bn
4%

$1,280-1,310Bn
4%

$305-335Bn
6%

37%
7%

24%

38%

29%

Africa & Middle East

7%
Europe

9%

19%

40%
36%

36%
9%

Asia/Australia

Latin America

North America

Source: IMS Market Prognosis, September 2014

Strong economic recovery in the U.S. and recent

healthcare reform have already had a positive
impact on the use of medicines and will grow
the market through the first half of the forecast
period.

Drug spending in Europe will remain limited by a

weak economic recovery, low population growth
and continued efforts to reduce public debt,
including healthcare and drug spend.

Asian export economies, including South Korea

and India, will grow along with global recovery,
increasing demand for medicines in Asia.

Southeast and East Asia will grow at twice

the global average, driven by population

growth, rising incomes and improved access to
healthcare.

Political tensions in Russia, Ukraine, Thailand and

Hong Kong pose a threat to economic stability
and negative price pressure from government
cost-control initiatives may also limit growth.

Unrest in the Middle East and North Africa will

further weaken Africa and the Middle East (AFME)

economies and investment, although medicine
spending growth is expected to continue
with rising incomes in Africa and continued
immigration to the Gulf region.

Chart notes:
Spending in US$ with variable exchange rates. Growth in US$ with constant exchange rates. Asia/Australia: includes China, India, Russia, Commonwealth of
Independent States (CIS), SE Asia, Oceania and Japan. Contribution to growth may not add to 100% due to rounding.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

22

TRANSFORMATIONS IN DISEASE TREATMENT

Specialty therapies continue to be more significant in

developed markets than in pharmerging
Spending in 2018
Top 20 Classes 73%

Others 27%

Developed Markets

Top 20 Classes 54%

Sales in
CAGR
2018 (LC$) 2014-2018

Pharmerging Markets

Others 46%
Sales in
CAGR
2018 (LC$) 2014-2018

Oncologics

$71-81Bn

7-10%

Pain

$19-22Bn

8-11%

Diabetes

$61-71Bn

12-15%

Antibiotics

$18-21Bn

1-4%

Autoimmune

$47-52Bn

12-15%

Hypertension

$16-19Bn

9-12%

Pain

$38-43Bn

0-3%

Oncologics

$12-14Bn

12-15%

Respiratory

$33-38Bn

1-4%

Diabetes

$11-13Bn

10-13%

Other Cardiovascular

Mental Health

$33-38Bn

1-4%

$10-12Bn

7-10%

Hypertension

$27-30Bn

(-4)-(-1)%

Antiulcerants

$10-12Bn

13-16%

Dermatology

$22-25Bn

5-8%

Dermatology

$9-11Bn

9-12%

Cholesterol

$21-24Bn

(-1)-2%

Cholesterol

$8-10Bn

18-21%

HIV Antivirals

$21-24Bn

3-6%

Mental Health

$5-7Bn

7-10%

Viral Hepatitis

$21-24Bn

36-39%

Respiratory

$4-6Bn

7-10%

Anticoagulants

$20-23Bn

17-20%

Immunostimulants

$4-6Bn

12-15%

Other CNS

$19-22Bn

5-8%

Other CNS

$3-5Bn

8-11%

Immunosuppressants

$16-19Bn

11-14%

Viral Hepatitis

$3-5Bn

20-23%

Antibiotics

$15-17Bn

(-3)-0%

Antiplatelets

$3-4Bn

10-13%

Antiulcerants

$14-16Bn

(-5)-(-2)%

Womens Health

$2-3Bn

5-8%

Vaccines

$13-15Bn

1-4%

Nasal Preps

$2-3Bn

8-11%

Other cardiovascular

$12-14Bn

1-4%

Anticoagulants

$2-3Bn

14-17%

Immunostimulants

$10-12Bn

(-1)-(-2)%

Erectile Dysfunction

$1-2Bn

5-8%

$7-9Bn

(-3)-0%

Immunosuppressants

$1-2Bn

10-13%

ADHD

Specialty

Traditional

Source: IMS Institute for Healthcare Informatics, October 2014; IMS Therapy Prognosis, October 2014

The emergence of new therapies for hepatitis C

have brought that therapy area into the top 20

for both developed and pharmerging countries.

Oncology continues to be the largest category

in developed countries, and the largest specialty

area in pharmerging countries.

Leading classes in pharmerging markets are

dominated by pain, antibiotics and hypertension,

while in developed markets specialty categories
such as oncology and autoimmune diseases are
more prominent.

Six of the top 20 classes in developed markets will

face patent expiration in the next five years and
therefore declining growth.

Chart notes:
Spending in US$ with variable exchange rates. Growth in US$ with constant exchange rates. Specialty therapies are defined by IMS as products that are
often injectable, high-cost, biologic or requiring cold-chain distribution. They are mostly used by specialists, and include treatment for cancer and other
serious conditions, and often involve complex patient follow-up and monitoring. Therapy forecasts from IMS Health Therapy Prognosis Global October
2014 adapted by IMS Health Institute for Healthcare Informatics to represent global sales and to include additional therapy classes. Abbreviations: ADHD:
Attention-Deficit Hyperactivity Disorder; CNS: Central Nervous System; HIV: Human Immunodeficiency Virus.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.

23

TRANSFORMATIONS IN DISEASE TREATMENT

Consistent high numbers of innovative and orphan

medicines expected through 2018
Global launch of new molecular entities (NMEs)

40

Global NME launches

35
30
25
20
15
10
5
0
2005

2006

2007

2008

2009

Novel mechanism

2010

Existing mechanism

2011

Orphan

2012

2013

Average
per year
2013-2018

Source: IMS Institute for Healthcare Informatics, October 2014

Through October 2014, there have been 31 NMEs

approved globally and 26 launched, six of which
are classified as orphans in either the U.S. or E.U.,
and 18 are specialty products.

Increasing numbers of orphan and breakthrough

designation applications and steady approval
rates are expected through the forecast period.

In 2014 there have already been 12 drugs

approved in the U.S. that have FDA Breakthrough

Therapy Designation, including the first biologic
(meningococcal group B vaccine).

Chart notes:
New molecular entities include novel small molecule, biologic or novel combination products (where at least one of the ingredients is novel), launched for the first
time globally. Novel mechanism therapies are those with novel mechanism of action applied for the first time in the approved indication. Existing mechanism therapies have mechanisms of action already used in their approved indication, though may still represent important clinical advances. Orphan therapies are approved
for orphan-designated indications. molecular or biologic entity or combination where at least one element is novel.
Global Outlook for Medicines Through 2018. Report by the IMS Institute for Healthcare Informatics.