Global Use of Medicine 2019 Outlook 2023

The global pharma market has experienced unprecedented growth over the last several years. Growth is expected to continue, with the global market exceeding $1.5 trillion by 2023. In the years ahead, pharma spending will be primarily driven by developed markets and newly launched innovative products.

However, growth may slow in some regions due to changes in healthcare policy. Increased use of generics and biosimilars may also decrease revenue during the next 5 years. As your organization looks toward the next decade, consider the following trends.

Predictions for the Global Pharma Market for 2023
The United States and China Continue to Drive Market Growth
The US and “pharmerging” markets will be responsible for most industry growth in the next 5 years. China, as the largest pharmerging market, continues to establish itself as a major player. The Chinese pharma market is expected to reach $140–170 billion by 2023, as growth is driven by reforms within the central government and expanded insurance access.

Growth within the top 5 European markets, Japan, and other pharmerging markets may be slower. Economic changes and healthcare expansions of the past decade will gradually take effect by 2023 and may limit pharma spending in some regions.

However, invoice spending in the US is expected to increase, reaching over $600 billion in 2023. These spending increases may be partially offset by patent expirations and generics. Rebates and discounts are also expected to reduce drug revenue, but new product uptake and brand pricing will promote industry growth.

Drug-Pricing Controversies May Affect Spending in the US
As the US market expands, pharma companies will face increasing pressure to control drug prices. Recent controversies and political debates have drawn prescription drug prices into the spotlight. While the federal government has not yet imposed price controls, several politicians have called for greater transparency in drug pricing. Pharma companies face significant pressure from the public to reduce prices and increase drug access among low-income patient groups.

As a result, upcoming product launch prices are expected to drop over the next 5 years. Price competition or pricing reviews by independent bodies may also affect US drug pricing by 2023.

The Potential Impact of New Drug Launches
Experts anticipate that an average of 54 new active substances will be launched annually during the next 5 years. R&D pipelines are growing, with success rates at historic levels. These new products will help increase pharma spending, with specialty drugs driving the majority of growth. Almost two-thirds of launches over the next 5 years will be specialty products, primarily oncology drugs.

The release of new next-generation biotherapeutics (NGBs) is expected to challenge current pricing models. NGBs typically carry a high list price while treating limited patient populations. As a result, pharma companies are often forced to offer outcome-based contracts and reimbursement schemes. These pricing structures may create difficulties for many companies.

Manufacturing and distribution challenges have also limited the number of competitors producing NGBs. If companies are not able to overcome these challenges, growth in this area may falter.

Areas to Watch
Digital Therapeutics
Technologic innovations continue to reshape the pharma landscape, as digital therapeutics (DTx) gain more attention. Currently, most DTx applications focus on the treatment of mental illness, cognitive problems, or behavior disorders. DTx offers a promising alternative for patients who can’t tolerate medications. Industry experts also anticipate that these applications may help close gaps in healthcare access among underserved groups.

However, developers must address several areas of concern before this treatment modality can enter the mainstream. Cost and pricing for DTx are in flux, as established healthcare systems struggle to adapt their structures to this new method of treatment. Many healthcare providers are also unfamiliar with DTx. Providers will require further training before they can effectively use these applications.

DTx must also seek US Food and Drug Administration clearance, a potentially expensive process. Software companies may need to establish partnerships with pharma and biotech companies to ensure a steady revenue stream during launch.

Specialty Drugs
Specialty drug spending will reach $475–505 billion in the developed market by 2023. During the next 5 years, 74% growth in this area will be driven by oncology, autoimmune, immunology, HIV, and multiple sclerosis spending. Specialty drugs may represent up to two-thirds of newly launched drugs during this period. Among specialty drugs, the price per patient is likely to remain high.

Oncology drugs continue to hold a significant market share, representing 30% of specialty drugs launched in the next 5 years. The current oncology pipeline includes 748 drugs in late-stage clinical development. These drugs represent 300 mechanisms of action, including 53 NGBs. Seventy to 90 oncology products are expected to launch within the next 5 years, and these drugs will continue to drive growth and spending.

Potential Market Pitfalls
Loss of Exclusivity
In the years ahead, loss of exclusivity (LOE) will have a significant effect on developed markets. The pharma market may lose $121 billion between 2019 and 2023, with $95 billion in LOE losses in the US. By 2023, nearly all of the top 20 branded drugs will face competition from generics or biosimilars. Humira®, the top-selling drug in the global market, will be forced to compete with a biosimilar beginning in 2023.

On a percentage basis, the impact of LOE will remain about the same in the US. However, the adoption of biosimilars in Europe will continue at a faster pace than in the US, due to policy shifts. The US may also experience increasing losses in the 2020s, as policy shifts drive greater use of generics and biosimilars.

Next-Generation Biotherapeutics
High drug costs and limited patient populations have restricted growth in this area. However, the use of NGBs is expected to increase in the next 5 years. Regulators will approve 5–8 new NGBs over the next 5 years.

Emerging Trends in the Asia Market
Pharma spending in Japan is expected to decline over the next 5 years due to the exchange rate and population dynamics. The use of generic drugs is also growing, which may limit spending. Nevertheless, spending on branded drugs is expected to remain strong.

In China, the government has recently sought to increase access to health care in rural areas. As a result, most of the population now has access to medicine and can afford higher levels of medical spending. These trends are expected to contribute to higher spending over the next 5 years.

Overall, the global pharma market is expected to continue its expansion. The US and China will experience the most significant growth, as specialty drugs dominate the landscape. However, price changes will affect drug spending across the globe. Changes in healthcare policy may also upend many market predictions.