Pharma 2020: from idea to action
The golden age of the global pharmaceutical industry is just around the corner
According to the new PwC report "Pharma 2020: From Idea to action" (Pharma 2020: From vision to decision), significant scientific and technological achievements combined with social and demographic changes and growing demand for medicines will lead to the revival of the pharmaceutical industry after 2020.
PwC in Russia provides audit and business consulting services, as well as tax and legal services to companies in various industries. PwC offices in Moscow, St. Petersburg, Yekaterinburg, Voronezh, Kazan, Novosibirsk, Krasnodar, Yuzhno-Sakhalinsk and Vladikavkaz employ about 2,300 specialists. More detailed information is available on the PwC-Russia website.
The international pharmaceutical market is showing steady growth, with sales reaching 1.08 trillion US dollars in 2011. The annual increase was 7.8%. The growth in developed countries turned out to be very insignificant. A completely different picture was observed in rapidly developing countries. Sales in the BRIC countries (Brazil, China, India and Russia) grew by 22.6%, and in the other 13 developing countries – by 7.2%. Demand for medicines in fast-growing markets, which will account for 33% of global GDP by 2020, will more than double by this time.
The projected sales volumes in Russia in 2020 will amount to about 45.1 billion US dollars, whereas in 2011 this figure was equal to 20.7 billion US dollars. The biggest demand for medicines is expected in China, where sales in 2020, according to forecasts, will be at the level of 175.8 billion US dollars.
It is expected that most of the projected sales growth in the pharmaceutical industry over the next decade will come from generics rather than proprietary products. Additional expenses for the purchase of generics in Russia in 2020 will amount to 10.9 billion US dollars, and for the purchase of patented products – will not exceed 3.9 billion US dollars.
One of the main problems faced by the pharmaceutical industry is the rising costs of healthcare services. Healthcare spending as a percentage of GDP is growing in all countries and across all population groups, regardless of income level, with the most significant growth observed in developed countries, which historically accounted for the bulk of the industry's income. The parties paying for health services demand better results and introduce new mechanisms to evaluate these results as an indispensable condition for paying for new medicines.
Currently, more than 85% of the budget of the healthcare industry in developed countries goes to healthcare services and less than 15% goes to medicines. Therefore, according to PwC estimates, if the pharmaceutical industry manages to achieve a reduction in the cost of expensive medical services and procedures, then its share in total healthcare costs in these countries may grow to 20% by 2020.
In rapidly developing countries, drug costs are growing much faster than anywhere else. Together, this figure could reach 499 billion US dollars per year by 2020 against 205 billion US dollars in 2011, as economic growth and improved access to health services stimulate demand growth.
However, patients in rapidly developing countries, as a rule, have to pay for most of the costs of health services on their own compared to patients in developed countries. And even in the countries of the BRIC bloc, where the highest growth rate has been recorded, spending on health services per capita is too low to support the development and production of biological products, the price of which is thousands of dollars.
According to the report, the industry needs to reallocate its costs and invest more in research and development at an early stage to cope with rising costs. There is still a lot to be done to improve productivity and payback of investments in research and development. Most of the products that will enter the market in the coming years are already in the preparation stage, but their release is not synchronized with the demand and growing expectations of the parties paying for medical services, healthcare institutions and patients.
Alina Lavrentieva, Partner, Head of Practice for working with pharmaceutical companies, PwC in Russia, comments on the situation as follows: "The industry is at a crossroads. In developed countries, budgets are being cut, and all stakeholders are looking for effective solutions to existing problems. Pharmaceutical companies should already bring real benefits to health care payers and patients in order to show what they are capable of and restore confidence in the industry. In rapidly developing countries, companies are obliged to respond to the growing needs of the population with full responsibility, taking into account demographic and cultural diversity."
The full text of the report "Pharma 2020: From idea to action" (Pharma 2020: From vision to decision) is available on the PwC website.
Portal "Eternal youth" http://vechnayamolodost.ru10.12.2012