Analysis of Global Pharmaceutical Product Market in 2020

According to the forecast of IMS, global pharmaceutical product trading volume in 2020 will reach 4.5 trillion unit doses, up 24% from 2015; the total spending is expected to exceed USD1.4 trillion, up 29%-32% from 2015.

The world can be mainly divided into two markets, i.e., new pharmaceutical markets, such as counties with fast economic growth like China, India and Brazil; and developed markets, such as economically developed regions like the U.S., UK and Japan. Wherein, emerging markets are still the markets with the largest drug usage, accounting for two-thirds of the global pharmaceutical product usage mainly comprised of generic drugs and drugs with significant usage increase due to expansion of the health care system. Developed markets will continue to account for the majority of the pharmaceutical product spending, mainly because: on the one hand, the unit price of pharmaceutical products of developed markets is relatively high, on the other hand, new drug combination has brought considerable clinical benefits to patients facing a wide range of diseases.

Developed markets will use more original branded drugs and specialty drugs, while emerging markets will use more non-branded drugs, generic drugs and OTC drugs. Use of new drugs (i.e., drugs going to market in the prior decade) will account for 0.1% pharmaceutical product usage in emerging markets, while such ratio will be about 2-3% in developed markets.

Pharmaceutical product spending will be concentrated in developed markets, with more than a half of the spending being on the original brands and focused on noninfectious diseases. Position of the specialty treatment area will be more important in developed markets than in emerging markets, and the use of the traditional pharmaceutical products is more diversified in developed markets. The spending growth will be mainly from the use of branded drugs in developed markets, while such growth will be driven by the increased usage but offset by the impact of patent expiration.

Branded drug spending in developed markets will rise by USD298 billion in the 5 years to 2020 as affected by the new products and price increases in the U.S., but such will be offset by an estimated USD90 billion in net price reductions. Compared to the last 5 years (2011-2015), patent expiration of small molecule drugs will have a greater influence during 2016-2020, and have an increased impact on biological drugs.

The pharmaceutical product spending and growth impetus of the U.S., the 5 European counties and Japan in 2020 will be dramatically different from today. The spending growth of emerging markets will be mainly from pharmaceutical product usage growth, and China will spend USD160-190 billion by 2020 as a leading emerging country, but its growth will slow down.

Many major markets will face a substantial shift of the budget mechanism by 2020, with the market to get rid of the isolated budget mechanism, i.e., the practice of pharmaceutical product budget management being independent of other health care costs. Emerging economies will focus on providing people in need with treatment opportunities and access to the essential pharmaceutical products, to minimize the endemic healthcare gap. More providers in a greater portion of the world will be subject to performance or outcomes-based contracts or payment systems, bringing sharper scrutiny to the patient outcomes and costs associated with patient care. More healthcare services will be delivered using technology means by providers (other than doctors) and in patients’ homes, pharmacies and community supporting facilities. The use of technology will be key to the advancement of healthcare industry, especially in emerging markets where the expense of large scale infrastructure projects would delay progress. Patients will have more treatment options, especially in cancer and rare diseases, and will be informed, motivated and establish cooperation with relevant personnel in treatment choices. Their financial risk will also rise as private and public payers in developed economies have already begun to increase patients’ levels of payment. In low- and middle-income countries, self-paying part will shift to premiums for private or supplementary insurance as countries strive for universal health coverage.