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Pharma regains growth momentum in 2014


The pharmaceutical industry is back.

Fueled by the launch of expensive, new biotech medicines, rising prices for both branded and generic drugs and a recent slowdown in branded-drug patent expirations and generic competition, the U.S. pharmaceutical market is staging a remarkable resurgence.

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The recovery kicked off in 2013, with total U.S. prescription sales up 3.2% to $329 billion. It accelerated rapidly in 2014, with sales expected to rise 11% for the year.

“We’re back to double-digit growth that we haven’t seen in 10 years ... because of specialty drugs and price inflation,” said Doug Long, VP-industry relations for IMS Health. In addition, he said, prescriptions dispensed in the United States rose 1.6% in 2013, “the second consecutive year reversing flat or declining prescription demand” that held pharmaceutical sales growth in check for years.

The U.S. market “is expected to grow at a compound annual growth rate of 5% to 8% through 2018,” IMS reports. It credits “a shift in the balance of the ‘innovation cycle’ as new drug launches eclipse older branded medicines facing generic competition.

 Result: “The $91 billion spent in the second quarter of 2014 is the highest ever,” Long said. “You may have the first $100 billion quarter in the next few years, which would mean the U.S. marketplace is growing $400 billion [a year].”

Higher prices for generics and new drug development — particularly of high-ticket specialty and biotech medicines aimed at cancer, hepatitis and other serious conditions — are behind the explosive growth. The FDA approved 39 “breakthrough” molecules between early 2013 and April 2014, most of them bioengineered and many costing tens of thousands of dollars per treatment course. Biologics accounted for 28% of total prescription sales in 2013, according to IMS, and rose 9.6% in sales, compared with a 0.1% rise for small-molecule drugs.

“Specialty is where most of the development is coming now,” said Long. “And there’s a lot of generic price inflation; it’s the number one issue on the minds of many payers.”

What’s more, the recent or upcoming expiration of patents on big-selling drugs like Nexium, Celebrex, Lunesta, Abilify and Crestor promises a new era of opportunity for generics. Branded drugs worth $94 billion in annual sales will face the end of their patent exclusivity by 2019, IMS predicts.

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