Global drug spend projected to reach more than $1 trillion by 2016

July 13, 2012

Annual global spending on medicines will reach nearly $1.2 trillion by 2016, while U.S. spending growth is projected to soar to between $350 and $380 billion by 2016, according to a report issued recently by the IMS Institute for Healthcare Informatics.

Annual global spending on medicines will reach nearly $1.2 trillion by 2016, while U.S. spending growth is projected to soar to between $350 and $380 billion by 2016, according to a new report.

The IMS Institute for Healthcare Informatics recently released its extensive drug spending projection report, “The Global Use of Medicines: Outlook Through 2016” report.

IMS attributes the overall growth in global spending to the growth in biologics, pharmerging markets, and generic drugs. However, IMS projects that developed markets – including the United States, Europe, and Japan – will decline to 57% of global spending due to patent expiries, slower branded drugs growth, and increased cost containment action by payers.

In the United States, “Patent expiries and the impact of low-cost generics will affect spending growth…peaking in 2012 and 2013,” according to the report. However, new brands’ contribution to spending will increase slightly to an estimated $10 to $12 billion per year from 2012 through 2016, as the number of approvals increases.

The top 20 therapy areas will account for 42% of total global drug spending. Classes with the highest levels of spending in 2016 will include: cancer, diabetes, asthma/COPD, autoimmune diseases, and lipid regulators. Oncology drugs, for example, will account for between $83 and $88 billion in global drug spending in 2016.

Global spending on generic medications is expected to increase from $242 billion in 2011 to between $400 and $430 billion by 2016. Global brand spending will increase from $596 billion in 2011 to between $615 and $645 billion by 2016, primarily from developed markets.

While biosimilars’ adoption will expand, spending will remain modest through 2016, according to the IMS report. Spending on biosimilars will increase from $693 million in 2011 to between $4 and $6 billion by 2016, representing only 2% of the biologic spending.

“Adoption is expected to remain modest….largely because most biologic medicines will stay protected by patents or market exclusivity in many countries,” the report stated.