China to Become World's Third-Largest Pharmaceutical Market Next Year
IMS Announces 17 Countries Now Rank as High-Growth ‘Pharmerging' Markets; Forecast to Contribute Nearly Half of Industry Growth by 2013
NORWALK, CT, March 16, 2010 - IMS Health today announced that 17 high-growth pharmaceutical markets are now ranked as "pharmerging," up from seven currently, reflecting an unprecedented shift of industry growth to the world's emerging economies. A new IMS study, "Pharmerging Shake-Up: New Imperatives in a Redefined World," predicts that these 17 countries will in aggregate expand by US$90 billion during 2009-13 and contribute 48 percent of annual market growth in 2013 - up from 37 percent last year. Significant changes in the global economic and healthcare landscape - including rising levels of healthcare access and funding - and the changing mix of generic and innovative products have contributed to the ongoing market realignment.
"With a raft of pharmerging countries rapidly gaining market share, we're seeing a new world order take hold within the pharmaceutical industry," said Murray Aitken, senior vice president, Healthcare Insight, IMS. "It's clearer than ever that the China market is in a league of its own, while an expanding group of ‘fast followers' are building momentum and providing additional growth opportunities. These are all diverse markets with their own unique healthcare funding, delivery and distribution characteristics. But collectively, they offer strong growth prospects fueled by rising GDPs, expanding access to healthcare, and in many cases, an improving regulatory environment."
The IMS study also cites key dynamics that continue to contribute to lower sales growth in mature pharmaceutical markets, including high rates of patent expiration, increased market penetration of generics, under-funding of the biotech industry, changes in reimbursement, tighter government restrictions around product safety and spending, as well as macroeconomic conditions.
In reviewing each of the world's emerging economies, the company applied its proprietary market assessment and forecasting capabilities to identify three levels of pharmerging markets. The number of countries rated as pharmerging has expanded from the seven identified in 2006 - China, Brazil, Mexico, India, Russia, South Korea and Turkey - to 17 markets. IMS also has re-classified South Korea as a "developed" market based on its current GDP level.
Tier 1: China. With a GDP of more than $8 trillion, China is poised to become the world's third-largest pharmaceutical market next year - up from #8 in 2006. The country will contribute an additional $40+ billion in annual sales by 2013, comparable to the level of increased sales forecast for the U.S. market in the same period. Most of the growth in China will continue to come from branded generic products manufactured and marketed by established domestic companies, although demand for innovative products from multinational companies is rising in the country's leading urban centers.
Tier 2: Brazil, Russia and India. These countries are each expected to add $5-15 billion in annual pharmaceutical sales by 2013. Brazil and Russia both have achieved consistent double-digit pharmaceutical sales growth in recent years, while India has benefited from a rising middle-class population, improvements in medical infrastructure and the establishment of intellectual property rights.
Tier 3: "Fast Followers." An additional 13 countries are now expected to contribute $1-5 billion each in annual sales growth by 2013. They are: Venezuela, Poland, Argentina, Turkey, Mexico, Vietnam, South Africa, Thailand, Indonesia, Romania, Egypt, Pakistan and the Ukraine. While each market is unique, they are all complex, dynamic and subject to rapid change.
"The key essentials are in place for the industry to drive new opportunities within each tier of the pharmerging markets," said David Campbell, senior principal, Pharmerging Markets, IMS. "Our experience points to the clear advantages that exist for the early movers. Pharmaceutical manufacturers that lead in building out organizational competencies, tailoring portfolios and adapting business models to these new markets will reap the benefits of differentiation and entrenched presence compared to those that wait."
To access the IMS study, "Pharmerging Shake-Up: New Imperatives in a Redefined World," go to http://www.imshealth.com/pharmergingreport2010.
About the Study
IMS's pharmerging market study segments country economies into developed and emerging sectors, using a per-capita GDP threshold of $25,000. Countries classified as emerging are subdivided using a composite of macroeconomic metrics and market data, including GDP and forecasts from IMS Market PrognosisTM, a series of strategic market forecasting publications that provide unparalleled insights into the economic and political issues affecting the pharmaceutical and healthcare industries. Based on a rigorous evaluation of the key events affecting the marketplace, IMS Market Prognosis provides a five-year forecast at the country, regional and global level. The new, refined definition for pharmerging markets ranks countries on the basis of their minimum anticipated growth contribution to the global pharmaceutical market between 2009-13.
IMS Market Prognosis forecasts take full account of key issues impacting the pharmaceutical and healthcare industries. Additional factors that may affect overall growth include major safety events resulting in product withdrawal or prescribing restrictions; shifts in regulatory approval standards from their current levels; the application of sudden cuts to drug spending levels; public health crises; and a deterioration in economic conditions. Growth is measured in constant dollars to avoid the influence of currency exchange rates; sales are calculated at the ex-manufacturer level. IMS Market Prognosis forecasts use an econometric model that includes forecasts for economic indicators such as Gross Domestic Product, Consumer Expenditure, and the Consumer Price Index from the Economist Intelligence Unit. As the basis for the forecast model, changes in these indicators will impact forecasted pharmaceutical performance.
About IMS Health
Operating in more than 100 countries, IMS Health is the world's leading provider of market intelligence to the pharmaceutical and healthcare industries. With more than 55 years of industry experience, IMS Health offers leading-edge market intelligence products and services that are integral to clients' day-to-day operations, including product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide. Additional information is available at http://www.imshealth.com.