Global spending on medications will grow at a slower rate over the next few years, mainly because of a move towards generics and policy-driven changes in many nations, according to a new report issued by the IMS Institute “The Global Use of Medicines: Outlook Through 2015”. Global spending on medications is expected to reach $1.1 trillion by the end of 2015.

While global medicine spending has been rising by an average of 6.2% annually over the last five years, the coming five years will see growth slow down to between 3% and 6%, the authors predict.

The following factors will have an impact on global spending:

  • Slow US spending growth
  • Patent expiries in industrial nations
  • Sustained demand in emerging markets
  • Policy changes in several nations

Murray Aitken, executive director, IMS Institute for Healthcare Informatics, said:

“The future level of spending on medicines has striking implications for healthcare systems and policy makers across the developed and emerging economies. Past patterns of spending offer few clues about the level of expected growth through 2015. There are unprecedented dynamics at play, which are driving rapid shifts in the mix of spending by patients and payers between branded products and generics, and across both developed and pharmerging markets.”

The following dynamics were identified by the IMS Institute:

  • Brands – these will have make up a progressively smaller share of the market. Even though aging populations in industrial nations will be using more brand drugs, the impact of patent expiries will more than offset this growth. The authors predict that spending on branded products in 2015 will be no higher than in 2010. In 2005 approximately 70% of drug spending was on branded products, compared to 64% in 2010 – market share is expected to drop further to 53% by the end of 2015.

    Even though there will be robust growth in branded product spending in emerging economies, they will spend 80% of their money on generics in 2015.

  • Patent expiries in developed markets – payers in developed nations will save $98 billion because of patent expiries by the end of 2015, compared to $54 billion between 2005 and 2010. The USA is expected to see a huge expansion in generic spending.
  • New therapies – new therapies are emerging for unmet patient needs. Examples include oral drugs for multiple sclerosis, two new medications for arrhythmia, metastatic melanoma treatments that reduce mortality significantly, and the first therapeutic prostate cancer vaccine.
  • Emerging markets – known as pharmerging markets. These markets are rapidly reaching US drug spending levels. They are expected to double expenditure on drugs over the next five years to $285-315 billion (versus $151 billion in 2010). Pharmerging markets are expected to overtake those of Germany, France, Italy, Spain and the UK by 2015.
  • Health policies – government policies throughout the world will have a major impact on global drug spending during the next five years. Examples include the US Affordable Care Act, Chinese price controls, price cuts in Japan, and strong moves towards generics in several developed nations.
  • Biosimilars – the IMS Institute predicts biosimilar spending to be over $2 billion per year, approximately 1% of global biologic spending. New biosimilars entering the US and European markets will also fuel this limited growth.

The IMS Institute makes predictions on the following therapeutic classes for 2015:

  • Oncology treatment – growth will slow to 5% to 8%. It is expected to still be the leading therapy class.
  • Asthma and COPD treatments – growth will slow to between 2% and 5%.
  • Diabetes treatment – growth will be from 4% to 7%. Diabetes prevalence is expected to continue rising. There will be new oral antidiabetic agents.
  • Lipid regulators – spending will drop to $31 billion, from $37 billion in 2010.

Aitken said:

“Over the next five years, we’ll not only see total spending exceed $1 trillion, but payers will be managing a significant patent dividend while emerging market governments seek to expand treatment options to more patients. All of this will require that healthcare stakeholders engage in a truly meaningful dialogue as they seek the common goal of increased access, cost reductions and better outcomes.”

“The Global Use of Medicines: Outlook Through 2015”

Written by Christian Nordqvist