A surge of patent expirations is predicted to drive annual growth.
Worldwide prescription drug sales are predicted to pass the $1 trillion mark by the year 2020, according to estimates by EvaluatePharma in the 7th edition of its World Preview report.
The pharmaceutical industry’s compound annual growth rate (CAGR) is forecast to grow significantly through the end of the decade, with an estimated peak of 5.1%, which follows an increase over the past year from 3.8% to 4.4%. Powering the growth is the projected impact of biological products nearing patent expiration, with $259 billion in sales deemed at risk, according to EvaluatePharma.
“[I]t is expected that the impact of biological patent expiries will go a long way to reduce the rate of cannibalization that actually materializes (containing it to 46%), thus allowing the pharmaceutical industry to continue to grow without suffering the loss of reduced sales,” the report authors wrote.
The report predicts that biologics will comprise more than 50% of sales among the top 100 prescription products, with recently launched biologic drugs like Sovaldi, Xarelto, Nivolumab, and Tecfidera having a significant impact on the top 10 by 2020.
“This illustrates the coming dominance of complex biologics and specialty care medicines in comparison to the small molecule drugs that have dominated sales for the industry in the past,” the authors wrote.
The World Preview predicts that Abbvie’s Humira will be the highest selling product by 2020, with a worldwide sales forecast of $12.7 billion.
Another contributing factor to the growing pharmaceutical market is the impact of health care reform.
According to the latest drug trend update from the Catamaran Corporation, the ramifications of the Affordable Care Act (ACA) will become apparent across pharmacy purchasing and benefits. For 2014 alone, Catamaran projects prescription drug spending to grow by 5.2%, which is approximately 2.9% greater than what the estimated growth would be if not for the ACA, according to the trend report.
The health reform factors playing the largest role in the anticipated spending growth are the requirement for expanded essential health benefits for plans through employers with 50 or more employees; the increased use of prescription drugs by 32 million people projected to be newly insured by 2019; and more generous insurance benefits that limit out-of-pocket spending, which shifts additional costs back to employers and health plans.
A robust drug pipeline is also a contributing factor to the projected growth of worldwide drug sales.
The pharmaceutical industry’s R&D pipeline is currently valued at $418.5 billion, which represents a 46% increase over last year, according to EvaluatePharma. The R&D expenditure is expected to continue growing over the rest of the decade at a moderate 2.4% increase, resulting in a $162 billion—spend by 2020.
Of the major therapy categories, oncology is predicted by EvaluatePharma to record the highest worldwide sales total, with a projected CAGR of 11.2% between 2013 and 2020.