Pharmaceutical Market Predictions for the United States and China

Pricing and outcomes will be competitive factors in the 2 largest national drug markets into 2020.

The United States and China represent the 2 largest national markets for pharmaceuticals and are predicted to maintain that position into the foreseeable future. Unlike other developed or developing countries currently trending toward cost controls, capping or reducing spending, the United States and China both are broadening insurance coverage and access to healthcare, including prescription medication.

Research published in the Journal of Pharmaceutical Policy and Practice projected the impact of the United States and China healthcare reforms on the international pharmaceutical market. In part, researchers found that although each country is employing different strategies, they both face a similar tension between providing healthcare for large, aging populations and providing market incentives for innovative research and development (R&D).

For pharmaceutical companies, a competitive advantage can be gained over the next 4 years by being able to offer low price points and demonstrate cost-effective outcomes in these 2 countries, according to the study.

Pharmaceutical Market Analysis for the United States and China

The report began by describing the history and current trajectory of healthcare policy in the United States and China, with particular attention to prescription drug spending. Whereas in the United States, the 2010 Patient Protection and Affordable Care Act included prescription cost saving measures to fund cost-benefit analyses and promote use of generics, China has expanded its essential drugs list (EDL), requiring “manufacturers to sell key medicines at prices intended to make them widely affordable,” the report authors wrote.

This study derived “bottom-up” projections of national drug spending from figures for prescription spending per patient, adjusted for anticipated changes in (1) demographics, (2) insurance coverage, and (3) substitution of generics for branded drugs. This was compared with a “top-down” projection of national drug spending, calculated from long-term growth trends in healthcare expenditures, adjusted for anticipated spending shifts in (1) inpatient care, (2) outpatient care, (3) prescriptions, and (4) other treatment.

Results from the “bottom-up” and “top-down” analyses were closely aligned for each country, adding confidence in the research methods. Finally, investigators performed sensitivity analyses to highlight assumptions underpinning their findings and to clarify how national policies may influence competitive dynamics in the pharmaceutical sector.

US and China Pharmaceutical Market Projections

The study found that both the United States and China will increase prescription spending at least through 2020. Pharmaceutical spending in the United States was projected to exceed $440 billion in 2015 and $700 billion in 2020. In China, pharmaceutical spending was projected to exceed $155 billion in 2015 and reach $260 billion in 2020.

Both countries are projected to increase their shares of generic drug use, but economic and structural incentives will keep shares of patented drug sales high compared with countries that exercise more government control over drug markets.

Authors of the study concluded that expanding private insurance contributes to brand drug spending because insurers compete for market share rather than for cost savings. They also predicted that the tension between encouraging blockbuster R&D and universal access to affordable medication will persist through foreseeable healthcare reforms in the United States and China. Both markets demonstrate potential for rising sales of branded and generic drugs.

The article suggested that each country’s approach can offer lessons for the other. China’s EDL establishes a baseline of affordable medications for common conditions while, in theory, still preserving economic rewards for product innovation. US focus on investing in preventive care and outcomes research also may achieve improved efficiencies in the use of pharmaceuticals.