IMS Health: Pharm Markets Projected To Grow At 7.8% Per Year

According to a new study by IMS Health, the global pharmaceutical market will grow at a 7.8% compound average annual rate during the next five years, reaching $406 billion in sales by 2002. The compound growth rate in North America is expected to be 9.8%, higher than the global average. At year-end 1998, the value of the global pharmaceutical market at manufacturers' selling prices is projected to total $301 billion.

"The global pharmaceutical industry outlook has never been stronger—we're entering a 'golden age,'" said Victoria R. Fash, IMS Health president and chief operating officer. "Based on unprecedented R&D investment by pharmaceutical companies worldwide, the number of new compounds in the pipeline is at an all time high. This is a significant growth driver, which ultimately contributes to the advancement of world health."

The market value projections are published in Global Pharma Forecasts 1998-2002, a report published annually by IMS Health's forecasting division. The report includes five-year growth projections for the pharmaceutical markets in 230 countries and 11 regions.

New Product Launches

New product launches are a key driver of pharmaceutical industry growth. Notable launches from the top global pharmaceutical companies include Evista (Lilly; osteoporosis); Viagra (Pfizer; impotence); Lipitor (Parke Davis/Warner Lambert/Pfizer; cholesterol lowering), Singulair (Merck & Co.; oral antiasthmatic), Epivir-HBV (Glaxo Wellcome; antiviral for hepatitis B), Zeloda (Roche; breast cancer chemotherapy), Plavix (Sanofi/BMS; platelet antiaggregant), and Embrel (Wyeth-Ayerst; rheumatoid arthritis).

Regional Pharmaceutical Market Growth

During the next five years, the fastest growing regions are expected to be North America, the Middle East, Australasia and Southeast Asia, including China. Japan and Western Europe pharmaceutical markets are expected to grow at rates slower than the global average. Growth in the Japanese market will continue to be constrained by economic pressures in the first half of the period under review, but will improve in the second half.

North America remains the world's largest pharmaceutical market, with 39% of 1998 projected worldwide sales, or $118 billion. Contributing to growth are new product launches and volume gains resulting from increased prescription drug coverage for Medicare and Medicaid recipients under managed care programs. Overall sales are expected to remain robust, producing a compound average growth rate of 9.8% over the 1998-2002 period. North American pharmaceutical market value is expected to total $169 billion in 2002.

Price controls will continue to challenge European markets. Growth in select European markets, including Germany, France and Italy is expected to be lower than the European regional average rate of 5.8%. Growth in the U.K., however, is expected to be 9% above the European regional average rate. Spain, forecast to grow at a 10.2% average annual rate, is expected to experience double-digit growth in the next five years.

Following the Southeast Asia Region's economic crisis, rapid expansion of pharmaceutical markets came to an abrupt halt in mid-1998. Several major markets have contracted dramatically since that time, particularly Indonesia, South Korea and Thailand. Evidence exists that patients in these countries are "trading down" to lower-cost treatments, e.g. selecting public instead of private healthcare services, primary care instead of hospital treatment, and self-medication products and traditional medicines instead of prescription drugs. However, market growth is expected to resume within two-to-three years, with the total pharmaceutical market in the Southeast Asia Region, including China, forecast to grow at an average compound growth rate of 11% to $20.11 billion in 2002. China's pharmaceutical market is expected to continue growing at a high rate, with average compound growth of 12.4% to $9.01 billion in 2002.

Therapeutic Classes

Cardiovasculars remain the leading therapeutic group in absolute size, for the combined developed markets of Australia, Belgium, Canada, France, Germany, Italy, Spain, Japan, the United Kingdom and the United States. In these ten developed countries, cardiovascular drugs represent 13.5% of the total pharmaceutical market in 1998. Alimentary Tract and Metabolism represent the second-highest market share at 10.5%, and Central Nervous System products are in third position with a 9.9% share of the pharmaceutical market in developed countries.

In terms of growth rate among the ten developed countries, Blood & Blood Forming Organs products are expected to experience the strongest growth, increasing to 9.3% of the pharmaceutical market by 2002. Musculoskeletal products are projected to grow to an 8.4% market share during the same period. The growth rate in cardiovascular is expected to slow during the next five years, representing just 6.1% of the pharmaceutical market in 2002.

In the Far East Region (Hong Kong, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand), alimentary tract and metabolism drugs currently are the largest therapeutic group, accounting for more than a quarter of all pharmacy sales in 1998. However, the growth of that therapeutic group is expected to be only 0.5% over the next five years. The second largest class in the Far East Region's retail sector is systemic antiinfectives, followed by respiratory system drugs. Respiratory drugs are expected to maintain current market share over the forecast period, while the systemic antiinfectives class is projected to increase its share of the retail market from 14.0% to 14.9%. Cardiovascular products in the Far East Region are forecast to demonstrate the highest compound average growth rate at 6.7%, followed by systemic antiinfectives at a 4.3% growth rate and central nervous system drugs with 3.9% growth.

In the Latin American Region (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela), alimentary tract and metabolism products represent the largest therapeutic group, and are expected to maintain that position during the forecast period. Systemic Antiinfectives and cardiovascular are forecast to hold the second and third market share positions of 10.1% and 9.4%, respectively.

For more information: Margot Vacheron, IMS Health, 200 Nyala Farms, Westport, CT 06880. Tel: 203-222-4273.

*Data Source

All country data have been derived principally from IMS HEALTH sources accounting for 95% of the world market and the remaining 5% from official export/import and local manufacturing data.

Assumptions:

1. All figures were calculated on a year-end basis at manufacturer's selling price (or CIF for imports) and represent local currency sales converted into $US exchange rates.
2. An important factor is the effect of exchange rate conversions during the five-year forecast period, which in some cases may well distort real growth in the specific countries. This is particularly relevant in the case of Latin America, where due to volatility in exchange rates, the forecast figures have been based on standard unit growth and constant prices.
3. Forecasts are at actual price and therefore reflect derived price forecasts (or assume that the price growth inherent in the historical data will continue into the forecast period).
4. All IMS HEALTH sourced data was grossed-up to account for any outlets not covered in the audit.
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