Economy to reduce drug companies' sales $10b
NEW YORK - The economic crisis may cost drug makers as much as $10 billion in revenue next year as sales of prescription drugs in the United States are expected to increase at their slowest rate on record.
The worst financial slowdown since the Great Depression is expected to cause more patients to switch to generic drugs, split pills, and make fewer trips to the doctor, said IMS Health Inc. in a report yesterday. As a result, sales of drugs are projected to increase as little as 1 percent next year to $292 billion, the slowest rate since IMS started tracking drug sales in 1958.
The economic crisis is the latest blow for drug makers who are already facing the loss of patent protection on $84 billion worth of products through 2012. In addition, increasing scrutiny from US regulators has caused the number of new drugs allowed on the market to fall to the lowest level in 24 years. To counter waning demand in the United States, drug makers must turn to developing countries, led by India, China, and Brazil, for future growth, IMS said.
"In many respects, 2009 will reflect the new shape of the global pharmaceutical market," said Murray Aitken, a senior vice president at IMS, in a statement. Sales will be affected by "the shift in growth from developed countries to emerging ones, specialist-driven products playing a larger role, blockbuster drugs losing patent protection, and the rising influence of regulators and payers on healthcare decisions."
Doctor office visits have declined less than 1 percent in the 12 months through September and total prescriptions are up 1.2 percent, according to IMS.
Those trends are expected to worsen in 2009 when the total US pharmaceutical market will be in the range of $292 billion to $302 billion. The changing economic environment will stunt US market growth by as much as 3 percent, or $10 billion, IMS said.
The recent economic slowdown is expected to hit drug makers harder than previous recessions because the amount of money US patients have to pay out of pocket has increased as employers try to lower their health bills, said Diana Conmy, corporate director for market insights at IMS.
"In the current environment, there is a higher level of cost shifting to patients than we've seen in the past," Conmy said. "When you look at the levels of copays and premiums and general coverage, there is more cost shifting to the patients, there are more difficult decisions to make when it comes to healthcare."