QuintilesIMS drug spending outlook: $1.5 trillion in 2021, up 33%

The annual report, entitled this year as Outlook for Global Medicines Through 2021: Balancing Cost and Value, from the QuintilesIMS Institute for Healthcare Informatics, projects some moderating trends in drug revenue growth in both the developed and developing world. Revenue increases ran at around 9% globally in 2014-2015; now they are projected to run at 4-7% CAGR for the next five years. US growth, which ran at 10-12% in the previous two years, is projected to grow by 6-9% in the coming period. Reasons for past and future growth are mostly driven by industry innovation: the new hep C treatments added 2-3 percentage points all by themselves to global growth in 2014-5; that will moderate in coming years. In addition, biosimilars, now on the market in the US as well as much of the rest of the world, will dampen biotech revenue growth, although QuintilesIMS Institute paints a broad-brush picture of how extensive that will be, given the uncertainties of health authority approvals. (It’s worth noting, though, that the two biosimilar filgrastims now on the market—Zarxio and Granix—have captured 40% of the US market.)

Given the heightened concern over drug pricing in the US, QuintilesIMS Institute looks more closely at the effects of discounting and rebates each year. The US market is estimated to reach $461.7 billion in this year, although the final figure won’t be out until next spring. For the forecast period, it predicts revenue to rise from that $462 billion to $645-675 billion by 2021 on an invoice-price basis, but $405-435 billion on a net basis. Discounting is back-estimated to have been in the 15-20% range overall for 2007-2011, rising to 28% this year, and projected forward to be 36% by 2021. (Is this the groundwork for a coming boom in PBM net revenues, or a more generous patient-support infrastructure through copay cards and vouchers? Or both, or neither?) “It is expected that manufacturers will continue to negotiate rebates and provide patient copay assistance similarly to the last few years with no major changes to the status quo, while it is also expected that rising patient exposure to costs makes these approaches even more necessary,” says the report.

European markets will grow only 1-4% over the next five years, as those countries are buffeted by slow economic growth, Brexit and currency deflation (relative to the US dollar). The report cites “price negotiation collaborations” as opposed to “arbitrary price controls” as an encouraging trend.

In 2016, China will have overtaken Japan as the No. 2 market in the world for drugs; its revenue is projected at $150-180 billion in 2021, but significantly, its growth rate will moderate from the double-digit 14.3% of the 2011-2015 period to less than 7% in the next five years. This year, QuintilesIMS Institute finds itself revising its list of “pharmerging” countries—ones where the per capita economic growth spending on medicines distinguished them from the rest of the developing world. Ukraine, Venezuela, Romania and Thailand are now out; Bangladesh, Chile, Kazakstan and the Phillipines are now in.

The full report is available here.