IMS sees brighter outlook for global drug sales

IMS sees brighter outlook for global drug sales

New York: Global pharmaceutical sales are proving more resistant than expected to the economic slowdown, helped by surprising strength in the United States, according to a report by the leading tracker of prescription drug data.

While growth through 2013 is still expected to be anemic compared to years past, the 2009 performance has led IMS Health to project a somewhat rosier outlook than it did in April.

Just six months ago, IMS forecast 2009 US prescription drug sales would decline for the first time since it started tracking the data in 1957, by 1 to 2%.

Now it sees growth of 4.5% to 5.5% this year, and growth of 3-5% in 2010.

IMS said higher-than-anticipated demand caught pharmacies off guard, forcing them to rebuild inventories slashed late last year as they girded for the impact of a deep recession.

Meanwhile, drugmakers were able to implement price increases despite the struggling economy, leading to the improved forecast.

Global pharmaceutical sales are now seen growing 4-6% in 2010, exceeding $825 billion, with sales topping $975 billion by 2013 -- a compound annual growth rate of 4% to 7% according to the IMS forecast.

That is still historically low compared with high single- to low double-digit growth seen in the past.

But “we’re seeing a slightly more positive outlook for the pharmaceutical sector mainly driven by stronger growth in the US market, which has proved to be more resilient than expected to the economic downturn," Murray Aitken, senior vice president for Healthcare Insight at IMS, told Reuters.

As a result, IMS raised its expectation range for five-year market growth through 2013 by one percentage point.

Patent expirations on several of the world’s top selling medicines over the next few years is the primary factor limiting global growth through 2013, as competition from cheaper generics takes a toll, IMS said.

Over the next five years, products that generate $137 billion in annual sales will lose patent protection. They include Pfizer Inc’s $12 billion a year cholesterol fighter Lipitor, the blood clot preventer Plavix, sold by Sanofi-Aventis, and Bristol-Myers Squibb, and GlaxoSmithKline’s Advair asthma treatment.

Branded drugs quickly lose upward of 80% of revenue once generic versions start flooding the market.

While several new drugs with potential to exceed $1 billion each in annual revenue are likely to enter the market to treat conditions such as osteoporosis, multiple sclerosis, rheumatoid arthritis, cancer, diabetes and blood clots, they are not expected to generate the magnitude of sales as those going off patent, IMS said.

Aitken said a real breakthrough drug could still generate many billions of dollars. “If we have five of those launch over the next couple of years, that would put a different complexion on the global market."

The seven emerging markets of China, Brazil, India, South Korea, Mexico, Turkey and Russia are expected to collectively see drug sales grow by 12 % to 14 % in 2010 and by 13 % to 16 % through 2013, IMS said.

China alone is expected to continue to exceed 20 % annual growth, IMS forecast, and contribute 21 % of the overall global growth rate.

The recession has had a more pronounced impact on drug sales in countries with higher patient out-of-pocket spending, such as Russia, Mexico and South Korea, IMS found, while sales in countries where prescription drugs are largely government funded, such as Germany, Japan, Spain and Turkey, have been less affected.

IMS said its latest forecast does not fully factor in the potential impact of a severe H1N1 swine flu pandemic, which could positively affect growth rates through greatly increased sales of vaccines and antiviral medicines.

In addition, Aitken said he sees additional drug sales resulting from patients going to their doctors with flu symptoms or to receive a vaccine “and at that time receiving a diagnosis for another unrelated condition, typically hypertension or diabetes."