We are happy to publish the results of an EAHC sponsored study on the EU pharmaceutical market outlook for the next 5 years, as we believe it presents some interesting scenarios. Here are some of the highlights:
‘One of the main drivers of pharmaceutical expenditure is the entrance of new branded products and technologies onto the market, the cost of which can be extremely high for healthcare payers. On the other hand, when products go off-patent, substantial savings can be achieved by healthcare payers.
Since 2011 and over a five year period to come (2012 to 2016), a large number of key small molecules brands will be reaching generic status in Europe. A number of other factors have and will continue to impact pharmaceutical expenditure such as ageing populations and the growing prevalence of chronic disease, but also the greater use of expensive treatments.
In addition to this, the increasingly tough regulatory environment together with a number of cost-containment strategies introduced by healthcare payers in response to the global economic downturn, will impact pharmaceutical expenditure. According to IMS Health forecasts, the annual global spending on medicines will reach nearly €933.7 billion by 2016 driven by pharma emerging markets, biologics and generics with global brand spending expected to increase from €463.7 billion in 2011 to €478.5-501.8 billion by 2016 and a global generic spending expected to increase from €188.3 billion in 2011 to €311.2-334.6 billion by 2016. In Europe, spending on medicines is expected to grow between -1% to 2% through 2016 (estimated for the five major European Union markets -France, Germany, United Kingdom, Spain and Italy).
According to Datamonitor forecasts, a slowdown is expected by 2016, with forecast sales growth at a CAGR (compound annual growth rate) of 1.9% in the five major European Union markets.
In the next decade, the sales potential for generic products is very high worldwide. Blockbuster drugs which have historically been the key growth drivers for the pharmaceutical industry are facing patent expiry, resulting in generic competition within Europe between 2011 and 2016. The patent cliff reaches its peak in 2011-2012 and will decrease from 2013.
The European Generic Medicines Association (EGA) estimated that generic medicines have reached €30 billion in savings per year. IMS Health projected that, with the expansion of the European Union to 27 member states, that this value could be doubled.
Moreover, in the medium-long term, market for biosimilars also has a very high potential for growth, producing actual savings of €1.4 billion. The European market, regarding its regulatory approval pathway for biosimilar drugs, is seen to take the lead in terms of market penetration of biosimilars.
The approval of a new generic product entering the market and its impact on the drug budget of a Member State will be influenced by several factors which are specific to each Member State such as current pharmaceutical policies in force, level of industry competition, physician practices and the patient’s acceptability of generics. Each of these factors will influence the relationship between generic and branded medicines within the same therapeutic classes.
The introduction of a generic product can have a direct effect on an entire therapeutic class when stipulated by regulation and/or an indirect effect when driven by competition and tendering. The competitive environment is a crucial factor behind the expected pressure on prices, with rapid price erosions in very competitive markets. In this competitive environment, industry life cycle management strategies such as the development of new formulations or new modes of administration represent serious barriers to competition.
Moreover, an update of previous health technology assessments is often triggered by the introduction of a generic product in a branded therapeutic class, with health authorities often recommending the newly genericized product as first-line therapy, thus displacing the whole market that has to adapt its pricing policies to these new recommendations.’
The whole study paper is available here: http://ec.europa.eu/health/healthcare/docs/creativ_ceutical_eu_pharmaceutical_expenditure_forecast.pdf