Shifting Fortunes in API Market Growth

Biologics enhance their positions amidst slowing growth in the global and US markets.
Aug 02, 2009
Volume 33, Issue 8

Patricia Van Arnum
The year 2008 marked another period of slowing growth in the global and US markets for prescription drugs. Increased market penetration of generic drugs, fewer new product launches from recent highs, and deteriorating macroeconomic conditions contributed to a sluggish performance in 2008 and bodes ominously for the near term. Biologics increased their position among the top-selling prescription drugs in 2008, and strong growth is expected for 2009 and beyond.

Crunching the numbers

Global market. The global market (on a value basis) for prescription drugs increased 4.8% to $773 billion (see Figures 1 and 2), according to IMS Health. Although global pharmaceutical sales again increased in 2008, the rate of growth has slowed from a recent high of 10.2% in 2003 to only 4.8% in 2008 (see Figure 1). This trend reflects the sixth-consecutive year in which the rate of growth has declined (see Figure 1).

Figure 1: Annual percentage growth in global prescription pharmaceutical sales. (DATA FOR FIGURE 1 IS COURTESY OF IMS HEALTH)
For 2009, IMS projects that the value of the global pharmaceutical market will increase only 2.5–3.5% on a constant dollar basis in 2009 to $750 billion (in current market dollars), based on estimates as of April 2009. IMS is forecasting a $70-billion reduction in global pharmaceutical sales from 2008 to 2009, driven by the lower growth rate and fluctuations in currency exchange rates. Of the $70-billion reduction, $15 billion is due to the economy and lowering of the growth rate; the remaining $55 billion is a result of currency exchange rates based on data from the Economist Intelligence Unit which tracks and forecasts exchange rates and macroeconomic indices. The near-term outlook is somewhat better as the global compound annual growth rate (CAGR) is projected at 3–6% through 2013.

Figure 2: Global market for prescription pharmacetical sales. (DATA FOR FIGURE 2 IS COURTESY OF IMS HEALTH)
US market. A key reason for the subdued global outlook is declining growth in the US pharmaceutical market, which was the largest national market in 2008. US sales of prescription drugs increased only 1.3% to $291 billion in 2008, according to IMS Health. For 2009, IMS projects that prescription drug sales in the US will decline by 1–2%, a historic low, based on estimates as of April 2009, and the overall five-year CAGR is expected to be flat. The expiration of several blockbusters in 2011 will curtail growth through the end of 2013.

lorem ipsum