Global spending on pharmaceuticals is expected to break through the $1trillion (£650bn) barrier over the next five years as demand from emerging economies surges, research shows.
Drug sales are expected to grow at between 5 and 8 per cent per year until 2014, taking the total spent to $1.1trn, according to IMS Health, a healthcare industry intelligence group.
Established drugs losing their patent protection in the developing world, combined with stronger demand from these countries, will push up sales by nearly $300bn a year, the group said.
"Patient demand for pharmaceuticals will remain robust, despite the ongoing effects of the downturn being felt in many parts of the world," said Murray Aitken, a senior vice-president at IMS Health. "In developed markets with publicly funding healthcare plans, pressure by payers to curb drug spending will only intensify, but that will be more than offset by the ongoing, rapid expansion of demand in the emerging markets".
IMS expects drug sales in developing nations to grow at between 14 and 17 per cent over the next five years, overshadowing Western markets that will expand at between just 3 and 6 per cent. Despite this surge in emerging economies, IMS Health predicts that the US will continue to be the world's biggest market for healthcare, with a spend of $390bn by 2014.
Forecasts of stronger growth will come as welcome relief to the giants of the pharmaceuticals industry. Companies such as GlaxoSmithKline and AstraZeneca have reported stiffer competition in recent years from makers of generic drugs, who increasingly have used the courts to challenge the patents owned by the majors.
By 2014, drugs whose sales currently total $142bn will face new competition from cheaper generics, according to IMS. In the US, six blockbuster drugs will lose their patent protection by 2012, including GSK's asthma treatment, Advair, and Pfizer's anti-cholesterol pill, Lipitor. GSK and AstraZeneca have ramped up their efforts in emerging markets. David Brennan, the chief executive of AstraZeneca, said recently: "There is no denying the scale of the opportunity these markets present but, like anything else in this industry, it takes a sound strategy and excellent execution." Yesterday, the company said: "Everyone points to population growth in emerging markets, but what is as important is the rising demand driven by increasing middle classes."
Despite the predictions of strong growth, 2010 will see a temporary slowdown. The global market is expected to expand by between 4 and 6 per cent this year – compared with 7 per cent growth last year, when the market was worth $837bn. In 2008, the industry grew by 4.8 per cent.
IMS Health said this year's falls would be triggered by tighter price controls imposed by European governments. It also predicted that certain therapy areas were likely to lead international growth. Its report added: "As pharmaceutical industry research and development programmes adjust to the broad availability of low-cost generic options in many chronic therapy areas, higher growth will occur in those therapy areas where there is significant, unmet clinical need."