Pharma Outlook: The Rising Stars Among Specialty Medicines
Specialty medicines are an important engine of growth for the global pharmaceutical market, projected to account for 40% of the market by 2018. So what are the leading therapeutic classes and key drugs in these classes? DCAT Value Chain Insights (VCI) examines the key market performers.
Specialty medicines on the rise
The global pharmaceutical market is expected to grow to nearly $1.3 trillion by 2018, up from $989 billion in 2013, according to the IMS Institute for Healthcare Informatics. Specialty medicines, particularly in developed markets, will be an important part of that growth. Specialty medicines are projected to contribute 40% of total global spending growth by 2018, according to a recent analysis by the IMS Institute for Healthcare Informatics. Specialty medicines are defined by IMS as products that often are injectable, high-cost, biologic, or require 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.
Higher spending on specialty medicines is expected over the next five years, particularly in developed markets. Much of this growth is from medicines bringing new treatment options to patients, including breakthrough therapies or even cures that often reduce complications or hospitalizations while improving outcomes. Advances will be particularly notable in the oncology, autoimmune, respiratory, anti-virals and immunosuppressants therapy areas. The surge in cancer drug innovation in recent years will continue and contribute to global spending on all oncology drugs—reaching about $100 billion in 2018, up from $65 billion last year, according to IMS. The introduction and uptake of potent new medicines for treating Hepatitis C are expected to result in about $100 billion in total spending over the five-year period ending 2018.
As might be expected, growth in specialty medicines will be most marked in developed markets (defined by IMS as the US, Japan, Germany, France, Italy, Spain, Canada, the UK, and South Korea), according to IMS. Of the $115 billion to $145 billion in absolute spending growth projected for North America between 2013 and 2018, 53% will be for specialty drugs and 47% for traditional drugs although continued growth of traditional medicines in North America is offsetting specialty growth, according to IMS. In Europe, the growth from specialty medicines is even more dramatic. Ninety-four percent of the $25 billion to $35 billion in absolute growth from 2013-2018 in Europe will be for specialty medicines; only 6% of that growth will be from traditional medicines.
The share of absolute specialty medicine growth in Asia is projected to increase from a level of 21% during 2008-2012 to 24% in the forecast period of 2013-2018; the projected absolute growth of both specialty and traditional medicines in Asia is expected to be $100 billion to $130 billion for the forecast period of 2013-2018, according to IMS. For purposes of the analysis, Asia includes China, India, Russia, the Commonwealth of Independent States, Southeast Asia, Oceania, and Japan. In Latin America, public sector spending on medicines will continue to be dominated by cost-containment policies and shift growth to traditional, non-specialty drugs. Of the $25 billion to $35 billion in absolute spending growth projected for Latin America from 2013-2018, only 8% will be related to specialty medicines and 92% will be for traditional medicines. A similar pattern exists for Africa and the Middle East, where spending on medicines is projected to increase by $15 billion to $25 billion for the forecast period of 2013-2018; specialty medicines will account for only 7% of that increase and traditional medicines 93%, according to IMS.
In looking at overall pharmaceutical growth through 2018 in both developed markets and pharmerging markets, a term used by IMS to denote emerging pharmaceutical markets, there are several strong areas. IMS points to strong growth in several therapeutic areas in developed markets for specialty medicines providing treatments for oncology, autoimmune disease, and viral hepatitis. Weak to declining growth is projected for two areas (immunosupressants and immunostimulants), and moderate growth is projected for two specialty areas (respiratory drugs and HIV antivirals).
For developed markets, spending on oncology drugs is expected to reach $71 billion to $81 billion by 2018 and increase at a compound annual growth rate (CAGR) of 7% to 10%, according to a recent analysis by the IMS Institute of Healthcare Informatics. Oncology continues to be the largest overall therapeutic category on a value basis in developed markets and is the largest specialty area in pharmerging countries, in which IMS projects 2018 sales of $12 billion to $14 billion and CAGR for the forecast period of 2014-2018 of 12% to 15%. For purposes of the analysis, pharmerging markets include China, Brazil, Russia, India, Algeria, Argentina, Colombia, Egypt, Indonesia, Mexico, Nigeria, Pakistan, Poland, Romania, Saudi Arabia, South Africa, Thailand, Turkey, Ukraine, Venezuela, and Vietnam. Globally, oncology makes up 31% of the total pharmaceutical industry pipeline and 25% of the late-stage pipeline (Phase II through pre-registration). Biologics make up 36% of the late-stage pipeline and 45% of the late-stage oncology pipeline.
Autoimmune therapies is the next largest specialty pharma sector in developed markets, projected to account for $47 billion to $52 billion in 2018 sales with a CAGR of 12% to 15% in the period of 2014â€“2018, according to IMS. The emergence of new therapies for hepatitis C has brought this therapy area into the top 20 for both developed and pharmerging countries. In developed markets, IMS projects spending on viral hepatitis of $21 billion to $24 billion with a CAGR of 36% to 39% between 2014 and 2018, the largest growth area among the leading 20 therapeutic classes in developed. Medicines for treating hepatitis C are projected to see strong growth in pharmerging markets as well. IMS projects sales of $3 billion to $5 billion with a CAGR of 20-23% in the forecast period of 2014-2018.
Moderate growth is projected for two specialty areas in developed markets: HIV virals, which are projected to reach sales of $21 billion to $24 billion by 2018 with a CAGR of 3-6% between 2014 to 2018, and respiratory drugs, projected to reach sales of $33 billion to $38 billion with a CAGR of 1â€“4%. Weak to declining growth is projected in two specialty areas in developed markets. The market for immunosuppressants is projected to decline 3% to zero percent and reach sales of $15 billion to $17 billion by 2018, and sales of immunostimulants are projected to fall by 1% to 2% during 2014-2018 and reach sales of $10 billion to $12 billion, according to IMS.
Breakthrough therapies spark innovation
Another important engine of growth for new drug development, particularly for specialty medicines, has been the US Food and Drug Administration’s (FDA) breakthrough therapy designation, which was authorized by the Food and Drug Administration Safety and Innovation Act (FDASIA) of 2012. Since the enactment of FDASIA on July 9, 2012, the FDA has approved nine new molecular entities (NMEs) with breakthrough therapy designations, all of which fall into a specialty category (oncology, viral hepatitis drugs, or respiratory medicines). According to FDASIA, a breakthrough therapy designation is a drug that is intended for use alone or in combination with one or more other drugs to treat a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. If a drug is designated as breakthrough therapy, FDA will expedite the development and review of such drug. All requests for breakthrough therapy designation are reviewed within 60 days of receipt of such a request, and the FDA will either grant or deny the request.
Table I outlines the nine NMEs approved by the FDA since its authorization of the breakthrough therapy designation. Of the nine NMEs approved, three were approved in calendar year 2013 and six were approved in calendar year 2014 (as of November 14, 2014). Seven of the NMEs with breakthrough therapies designation and approved by the FDA were small molecules and were approved as new drug applications and two were biologics and approved as new biologic license applications (see Table I).