Evolving World of Pharma: Changing face of the global pharma market: Market Analysis

Sarah Harding, PhD, Independent Science Writer

As well as driving scientific progress through research and development (R&D), and advancing new therapies that improve the health and quality of life of millions of patients around the world, the pharmaceutical industry is a key asset of the global economy. The global pharma market was estimated to be worth $1.1 trillion (United States [US] dollars) in 2017, and is predicted to reach $1.4 trillion by 2020. Considering that the total global gross domestic product (gross world product; GWP) is estimated to be close to $80 trillion, the pharma market alone might represent nearly 1.5% of the total global economy – an important contribution!

By far the largest market, in terms of national expenditure, is the US, valued at around $340 billion – close to one-third of the total global pharma budget. China, the second largest economy, spends around $110 billion on pharma products. This is a great representation of the changing face of the global market, as Europe’s share shrinks due to rapid growth in emerging economies (e.g. Brazil, China, India). Growth in these countries is being fuelled by increased affordability of drugs resulting from the launch of low-priced generics, and government programmes to support healthcare.

On the other hand, in the US and Europe, growth appears to be driven by new patents – specifically, innovations in oncology and autoimmune diseases. According to MarketResearch.com, anti-diabetic drugs are the largest segment of the global pharma industry, worth over $85 billion in 2017. However, drugs for some less prevalent cancers (e.g. thyroid, skin and ovarian cancer) are the fastest-growing subsegments. This has probably been helped by the US FDA introducing less rigorous regulatory procedures for cancer drugs, encouraging an increased rate of innovation in this field.

Therefore, while it has been widely celebrated that 2017 saw a return to new drug approvals, with many more new small molecules approved than in recent years (the US FDA approved 34 small molecule drugs in 2017; a 56% increase over the previous year), in the future we are likely to see a greater focus on biologics. In fact, nine of the 20 top-selling drugs in 2015 were already biologics and, according to an article on IgeaHub in April 2018, we might see as many as 13 biologics in the top 20 this year.

Of course, some things remain constant, and the industry continues to be led by its multinational giants. In March this year, ProClinical listed the top 10 pharma companies in the world by revenue. Top spot went to Pfizer, followed by Roche, Sanofi, Johnson & Johnson, Merck & Co (MSD), Novartis, AbbVie, Gilead Science, GlaxoSmithKline and Amgen. Together, these companies account for 30% of global pharma sales.

But who makes those drugs? The present pipeline of products is increasingly complex and requires specialized facilities, equipment and operational expertise. The high costs associated with these capabilities have led many smaller players, as well as certain pharma giants, to outsource a significant part of their business operations to contract service providers. Contract manufacturing organizations (CMOs) are known to offer significant cost benefits, access to larger production capacities, flexibility and reductions in time-to-market. Therefore, the past decade has seen an increased level of outsourcing to CMOs, which have risen to become a key, consolidated part of the pharma industry. According to Markets&Markets, close to 150 new CMOs have been established since 2000, and the success of the sector was underlined in a recent ISR report that suggested two-thirds of pharma manufacturing is outsourced. This represents a marked change in the industry dynamic, as CMOs emerge as key partners throughout a drug’s lifecycle, from development though to manufacturing.

In summary, the pharma market is still growing and evolving. In particular, changes in geographical dominance and R&D focus, and a continued trend toward outsourcing, may be affecting the strategic and tactical approaches of many small and large enterprises in our industry.

Author biography

Sarah Harding, PhD, Independent Science Writer

Sarah Harding worked as a medical writer and consultant in the pharmaceutical industry for 15 years, for the last 10 years of which she owned and ran her own medical communications agency that provided a range of services to blue-chip Pharma companies. In 2016, she began a new career in publishing as Editor of Speciality Chemicals Magazine, and is currently providing independent writing and consultancy services to the pharmaceutical and speciality chemicals industry.

-----------------------------------------------------------------------
Editor's Note:

To apply for becoming a contributor of En-CPhI.cn,

welcome to send your CV and sample works to us,

Email: Julia.Zhang@ubmsinoexpo.com.