London: Worldwide sales of pharmaceuticals will double to $1.3 trillion by 2020, driven by ageing populations, rising levels of obesity and a surge in demand from emerging markets, according to a new report.
PricewaterhouseCoopers (PwC) said on 13 June that seven newly rich countries -- Brazil, China, India, Indonesia, Mexico, Russia and Turkey -- could account for one-fifth of global drug revenues by 2020, up from just 8% in 2004.
The global report titled ‘Pharma 2020: The Vision--Which Path Will You Take?’ also shows that in the same period in India the exponential growth of chronic diseases can propel the country amongst top ten pharmaceuticals market in the world by 2020.
“Chronic disease will grow exponentially with India’s economic growth. India will be host to some of the largest number of diabetics, cardiovascular disease patients in the world,” PWC Associate Director Pharmaceutical and Life Science Sujay Shetty said.
Consequently, besides people’s increased spending on preventive medicine owing to rising incomes, the deteriorating health of young Indians would expand pharmaceutical market in the country.
Citing the example of diabetes, the report said the number of Indians with the disease is projected to reach 73.5 million in 2025. The direct and indirect costs of treating such patients are currently about 420 dollars per person per year.
China alone, on the other hand, may be the second or third-biggest market in the world, the international consultancy predicted.
China is already one of the world’s fastest-growing markets for Western medicines, with sales expanding by 12.3% to $13.4 billion in 2006, after 20.5% in 2005, according to IMS Health.
IMS, which compiles the most widely used statistics on pharmaceuticals, estimates global sales overall grew by 7% last year to $643 billion.
Major pharmaceutical manufacturers may not be able to exploit booming demand, however, unless they change radically their approach to developing and marketing new medicines, according to PwC’s Steve Arlington.
“The pharma industry will not be in a strong position to capitalise on opportunities unless research and developmnet productivity improves. The core challenge for the industry is a lack of innovation,” he said.
“The industry is investing twice as much in research and develpoment as it was a decade ago to produce two-fifths of the new medicines it then produced.”
Arlington, who heads PwC’s global pharmaceutical research and development team, believes the current business model adopted by most big drugmakers is simply not sustainable and the industry must shift more resources from marketing to research.
In particular, the traditional strategy of placing big bets on a handful of compounds and then marketing them heavily in the hope of achieving blockbuster sales will no longer suffice.
PwC forecasts the blockbuster sales model will disappear and be replaced by smaller, smarter and more effective sales forces, led by account managers who negotiate tender-based contracts on therapeutic benefit and outcomes.
With a shift in focus to adding value, rather than selling pills, companies in future may sell integrated packages of medicines and services, and some services could be more valuable than the medicines themselves.