November 15, 2007 — Laurie Lucas, Principal

US Pharmaceutical Market Growth Slows

I was interested to see IMS Health's 2008 Global Pharmaceutical Market and Therapy Forecast predicted the US pharmaceutical market would grow at 4% to 5% in 2008, which marks a historic low. There are several key market dynamics that are negatively impacting the growth of the US market. These include:

  • Patent expirations of blockbuster branded products in major therapy areas including lipid regulators, selective serotonin reuptake inhibitors, and osteoporosis treatments. Increased generic competition is estimated to decrease the cost of treatment by 10% to 25% in 2008
  • Our understanding of the pathophysiology of specific diseases leads to more “targeted” therapeutic approaches. Of the 29 new products anticipated to be approved by the FDA in 2008, 80% of these product will be primarily prescribed by specialists
  • Increased pressure from payers to control costs and limit access to certain treatments
  • Heightened concern over product safety leading to healthcare legislation that is slowing and halting (in some cases) FDA approval of new treatments
  • Leveling off of growth from the introduction of Medicare Part D prescription drug benefit

Overcoming Challenges

As a marketer for a pharmaceutical/biotech manufacturer, what can you do to overcome these hurdles? Accept and embrace that the market is evolving and prepare your products for success. The sooner you understand the challenges, the sooner you can develop strategies and tactical plans to overcome them.

  • Acceptance—the market is evolving from primary care-driven to specialist-driven. As such our definition of a “block buster” therapy is changing and our strategies and tactics will need to change too
  • Understanding—shift to specialty-driven markets significantly impacts marketing and selling FDA-approved products. Talk with healthcare providers to understand the impact this shift can have for your products
  • Action—leverage learnings into clinical development, regulatory, marketing, and managed markets plans
  • Expect to see more payers and manufacturers enter into “Pay for Results” arrangements. An example is Johnson & Johnson's money-back guarantee program for Velcade with the UK's National Health Service (NHS). J&J will refund the cost of therapy to the NHS for patients who only respond minimally or do not respond to Velcade.
  • Evidence—demonstrate that treatment provides value and decreases healthcare costs. Demonstrate value through a decrease in hospitalization, office visits, lab tests, or the need for concomitant medications
  • Payers will eventually mandate this data in order to ensure easy reimbursement. Favorable data can avoid “treatment tiers” and time-consuming pre-authorization processes
  • The Center for Medicaid and Medicare Services (CMS) is expected to more aggressively seek evidence that it is receiving “value” from treatments

The pharmaceutical/biotechnology market is rapidly evolving and is under increased pressure to bring new products to market quickly to replace decreased sales from products facing patent expiration. Additional hurdles are increased scrutiny and concern about product safety, payers desire to contain costs, and the desire to understand the “value” a particular treatment provides.

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US Pharmaceutical Market Growth Slows