Mumbai, Aug 27, 2010: Speculations are rife in the pharma industry that the predicted doomsday for companies is in 2012, but the recently launched IMS study titled “More ways to Win – CEO Agendas through 2020” — can possibly ally fears.“The main purpose of this study is to help CEOs of pharma companies get past the near term, which is definitely a rocky patch. Too many companies plan strategies up to 2012. But then the good news is that, between 2015-2020, the industry will see an accelerated growth rate and this is after factoring in the patent loses. Hence CEOs should have a game plan on their cards for the period between 2015-2020, ” says Mr Muray Aitken, senior vice president, Healthcare Insight, IMS Health, US talking exclusively to BioSpectrum.

The study goes on to say that over the next five years almost 50 percent of the growth will come from the major emerging markets, also termed as the 'pharmerging markets'. But they only represent 25 percent of the total global sales. The remaining 75 percent of sales will come from the traditional slow growing markets like the US, EU, Japan and Canada. “The challenge for any company today is that they cannot afford to avoid the emerging markets but at the same time they need to grow in the developed nations of the world. Hence, innovation continues to be the life blood of pharma even if the emerging markets are generic markets,” adds Mr Aitken.

After three years of slow growth, the industry will see a high single-digit growth in these very developed markets that contribute 70 percent of the total global sales. Developed markets today churn out $600 billion in sales, and within 20 years it will reach $1 trillion which means, a 5 percent CAGR. The global pharmaceutical industry, with total revenue sales clocking at $800 billion, can adopt two paths. The first path, based on strong growth in the pharmerging market and pipeline renewal can propel the industry to a $2 trillion mark. The second path can be that of companies facing the brunt of patent cliffs and cost containment thereby making revenues slip to $500 billion.

The good news again is that there is a burgeoning pipeline in the matured markets which will boost up revenues post 2015. “The pipeline is not dry and there is still substantial innovation but, again it will drive significant growth in 10 years. We looked at the pipeline in 41 disease areas and these represent 80 percent of this market,” added Mr Aitken. Most of these molecules are in clinical development stages and this prediction is after factoring in the high risks of their failure.

So how will the industry look by 2020? “While the past model relied on blockbusters, the future will not rely so much on just a few blockbusters. Individual companies will have different ways to pursue growth. So, in the years to come we will see different companies following different pathways rather than all companies following one,” says Mr Aitken. Companies need to be thoughtful about their disease areas given their capabilities, research and pipelines. Entry of a new innovation wave is expected late in the decade, including both substitute and synergistic technologies that have a potential to transform the market.

Between 2010 and 2015, in the matured markets, the growth rate will slack to 4 percent with sales from marketed products showing a growth of $135 million plus, sales of new launched products clocking at $89 million and the impact of patent loses at $94 million.

The brownie points comes in post 2015. The market revenue will shoot up to $1 trillion by 2020 with an accelerated growth rate of 7 percent. “Growth in marketed products during this period which include those launched between 2010-2015, will account for $205 billion in sales in 2020,” says Mr Aitken. Generics will outpace growth of brands but will still represent only 16 percent of sales in 2020. Biologics will outpace small molecules but they will slow down once biosimilars enters the market.

The top ten diseases such as oncology, Asthma/COPD, Hypertension, Psychosis, Anti Bacterials, Diabetes, GERD, Vascular diseases, constitute approximately 50 percent of today's market and out of these, eight will remain in the top 10 in 2020, with oncology still retaining the top market share of 12 percent by 2020. Presently, there are 500 oncology products in the pipeline with 90 expected to go to market by 2020. By 2020, pain and HIV will be the new entrants into the race.

Giving an India perspective, Mr Kumar Hinduja, Director, Account Management and Client Services, IMS Health, told exclusively to BioSpectrum, “Generics will continue to dominate the market. Today the Indian market is at $9.8 billion and by 2020, it will touch $30 billion. Looking at the pace of growth in India, it can reach that figure even before that. Chronic therapy will dominate the disease segment which includes diabetes, CNS and Oncology.” The spree of acquisitions by MNCs of Indian companies has triggered fears of increase in drug prices and a larger share of patented products. Refutes Mr Hinduja, “This is only a fear and even in the coming decade we will see that patented products will constitute just 8 percent of the market.” India is also likely to see its first NCE come out by 2015 with companies like Glenmark being on the forefront.