A grim fate for 2009 pharma?

The latest growth forecast for the 2009 pharmaceutical market might have come as a shock to many, but there is still hope for the industry in the form of new product launches and potential blockbusters.

The conclusions are drawn from the latest release of IMS Market Prognosis. "This adjustment to growth expectations is linked primarily to the lowered expectations for overall economic growth that are embedded in the Market Prognosis forecast models," Aitken explained. IMS's econometric model considers GDP, employment, consumer expenditure, government expenditure and other macroeconomic factors that are sourced from The Economist Intelligence Unit, and the estimates for these factors have changed significantly since the October forecast.

"For example, the October forecast assumed GDP would be growing in 2009 in each of the eight major developed markets — in aggregate by approximately 1.1%," said Aitken. "Our latest forecast assumes each of these markets will contract this year; in aggregate by almost 2%."

The situation in Europe is, at least, slightly more positive than that of the US where the pharmaceutical market has already been suffering for several years. "In the US, we're also starting to see the impact of rising unemployment, loss of medical insurance and reduced levels of consumer expenditure," said Aitken. Because of this, IMS is forecasting a contraction of the US market by 1–2% in 2009 — a historic low. "When we extend our forecast through 2013, we foresee variability in growth by year, but with essentially no net growth," Aitken added. In the US, where patients pay a high portion of drug costs, consumer spending is also changing; IMS is tracking a reduction in office visits and declines in new therapy starts in certain chronic care areas such as diabetes and depression.

Meanwhile, in more publicly-funded markets such as France and Turkey, Aitken explained that different policy actions are being seen, such as stimulus programmes that can have an indirect positive impact on the pharma market to the imposition of price cuts because of budget constraints. "Across the board, we're seeing a greater shift from branded products to generics and more pressure than ever to prove the value of medicines," he added.

But it's not all doom and gloom for the industry. "While the pharmaceutical industry is not recession-proof, it will feel the impact of the overall economic climate to a lesser degree than many other industries, where spending is more discretionary," said Aitken.

And a rebound is also expected in 2010. Although potential patent expirations in 2011 and 2012 will curb sales growth, approximately 50–60 new chemical or biological products are expected to launch during the next 2 years. Approximately two-thirds of these will be specialist driven and some will be first-in-class with novel mechanisms of action. In the expected launches, there could be six to ten potential blockbusters.

However, this good news doesn't alter the fact that market dynamics are changing, especially as emerging markets such as Brazil, China and India are expected to contribute more than half of the global market growth in 2009 and sustain an average 40% contribution through to 2013.

"This high level of growth in the emerging markets, combined with the contraction of the US market and ongoing low single-digit growth in other developed markets, is driving the pharmaceutical market to a new world order," said Aitken.

For the full interview with Murray Aitken, visit: http://www.ptemag.com/Aitken