Global Bio/Pharma Watch: Geographic Market Performance

What are the key happenings in the global bio/pharmaceutical industry from a market perspective? DCAT Value Chain Insights provides a view of key developments from across the globe impacting growth and industry performance.

Global spending on medicines—using invoice price levels—is expected to grow at a compound average growth rate (CAGR) of 3-6 % through 2025 to reach about $1.6 trillion by 2025, excluding spending of COVID-19 vaccines, according a recent research report, The Global Spending and Usage of Medicines by the IQVIA Institute for Human Data Science, which was released in April 2021. The total cumulative spending on COVID-19 vaccines through 2025 is projected to be $157 billion, largely focused on the initial wave of vaccinations to be completed by 2022. In subsequent years, booster shots are expected to be required as the durability of immunity and the continued emergence of viral variants make an endemic virus the most likely outcome.

On a therapeutic-area basis, the two leading global therapy areas—oncology and immunology—are forecast to grow at a 9% to 12% CAGR through 2025, lifted by significant increases in new treatments and medicine use. Oncology is projected to add 100 new treatments over five years, contributing to an increase in spending of more than $100 billion to a total of more than $260 billion in 2025. Immunology growth is projected to slow from the 17.3% CAGR over the past five years as biosimilars bring lower cost treatments offsetting growth from volume and drug launches. In addition, many new therapies are expected in neurology, including migraine therapies, potential treatments for rare neurological diseases, and the potential for therapies for Alzheimer’s and Parkinson’s, according to the IQVIA analysis.

Growth in global medicine spending will be lifted by stronger growth in what IQVIA terms as “pharmerging” markets (i.e., the most promising emerging markets countries) through 2025 and offset by developed markets where slower growth will result as losses of exclusivity for original brands outweigh increased spending on newly launched innovative products. Specific geographic market highlights are outlined below.

Geographic market growth

US. On a net price basis, the US market is forecast to grow 0% to 3% CAGR over the next five years (2021–2025) down from 3% CAGR for the past five years as rising off-invoice discounts and rebates are expected to slow spending growth over time, according to the IQVIA analysis. In total, off-invoice discounts and rebates result in spending that is estimated at 31% lower than invoice level in 2020 and projected to be 36% lower than invoice level in 2025. In addition to discounts and rebates, ongoing market dynamics around the use of medicines, the adoption of newer treatments, the impact of patent expiries, and new generic or biosimilar competition will all contribute to historically slow market growth in the US for the next five years (2021–2025).

Europe. Medicine spending in Europe is expected to increase 2% to 5% CAGR the next five years (2021–2025). Medicine spending in the top five European markets is expected to increase by $35 billion over the next five years (2021–2025), the same increase as in the past five years but with large shifts in the drivers of growth. While new brands were the largest driver of growth from the past five years, they are expected to contribute less in the next five years, according to the IQVIA analysis. Generics, including biosimilars, are expected to add over $31 billion in growth over the next five years, more than double the contribution in the past five years as a range of patent expiries and the maturation of biosimilars contribute to lower spending overall.

Germany, France and Spain had more modest impacts on spending in 2020 due to the pandemic and are projected to rebound in 2021 as they return to normal trends. Italy, the most impacted country early in the pandemic and the first to experience additional waves, had some of the greatest impacts from the pandemic and is expected to take longer to return to normal trends.

Japan. As the third largest global market, Japan will have flat-to-declining medicine spending as a result of the government’s continued biennial price-cut policy, according to the IQVIA analysis, but the market will see rising patent-protected original brand spending coinciding with policies to encourage a shift to generics for older medicines.

Pharmerging markets. In pharmerging markets, growth will be led by China, which is expected to accelerate post-COVID driven by greater uptake and use of new original medicines. China’s growth remains the largest driver of this group of countries and is being driven by a shift in the types of products being used, with spending being driven by new medicines to a greater degree than the very common traditional Chinese medicines. Medicine spending in China rose from $56 billion in 2010 to $138 billion in 2019, dipping to $134 billion in 2020 due to COVID, according to the IQVIA analysis. Over the past five years, spending growth was driven by original branded products, most often from multinational companies, which grew at an average of 12.3% per year to reach 28% of spending in 2020, up from 20% five years earlier. Over the next five years, government policies to update the national reimbursement drug list more frequently is contributing to a greater share of new original medicines being reimbursed, thereby resulting in higher levels of spending. Over the next five years, original brands and generics will each grow by more than 9% per year while other types of products will grow at less than half that rate. By 2025, China is projected to exceed $170 billion in medicines spending, an increase of almost $50 billion in the next five years.

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