Drug spending to hit $1.2tn in 2016

Global expenditure on medicines will top $1.2 trillion (£773 billion) in 2016, up from $960 billion in 2011, according to a report from the IMS Institute for Healthcare Informatics. Growth has been low in recent years. But it is expected to bottom out at 3–4% for 2012 and then rise to 5–7% for 2016.

Patent expirations for key products have hit pharma sales hard in recent years. But these are set to peak in 2012, the report says. After that, demand in so-called pharmerging markets will drive a rebound. (The pharmerging countries are defined as those with more than $1 billion in absolute spending growth during 2012-16 and GDP per capita of less than $25,000 at purchasing power parity: China, Brazil, India, Russia, Mexico, Turkey, Poland, Venezuela, Argentina, Indonesia, South Africa, Thailand, Romania, Egypt, Ukraine, Pakistan and Vietnam.)

Spending in the US will increase by an average of 1–4% per year over the next five years despite the patent expirations as a result of the Affordable Care Act and new drugs coming on to the market. Japan is looking at similar growth. But in Europe the picture is less promising. Average growth for the next years will languish between -1 and 2% because of widespread austerity measures across the region.

In contrast, expenditure in pharmerging markets will double from $194 billion for 2011 to $345–375 billion for 2016. Generics and other products that aren’t branded prescription drugs will account for 83% of the increase.