Global pharmaceutical market grew 7 percent in 2006
IMS Health, Norwalk, Conn., reported that the 2006 global pharmaceutical market grew 7 percent, at constant exchange rates, to $643 billion. A rebound in growth to 8.3 percent in the U.S. - fueled by an increase in prescribing volume due to Medicare Part D - and innovations in oncologics that drove strong 20.5 percent global growth in that therapeutic class, were key contributors to the market’s expansion. “We continue to see a shift in growth in the marketplace away from mature markets to emerging ones, and from primary care classes to biotech and specialist-driven therapies,” says Murray Aitken, IMS senior vice president, corporate strategy. “Oncology and autoimmune products increasingly are demonstrating their value in answering unmet patient needs - offering significant opportunities for growth.”
In 2006, specialist-driven products contributed 62 percent of the market’s total growth, compared with just 35 percent in 2000. A number of primary care classes are experiencing slowing or below market-average growth due to the entry of lower-cost, high-quality generics and switches to over-the-counter products. These classes include proton pump inhibitors, antihistamines, platelet aggregation inhibitors and antidepressants. Last year, generics represented more than half of the volume of pharmaceutical products sold in seven key world markets: U.S., Canada, France, Germany, Italy, Spain and the U.K. This trend reflects the changing balance between new and old products and the growing “genericization” of many primary care categories.
In 2006, pharmaceutical growth continued to be driven by increased longevity of populations, strong economies and innovative new products. Last year, 31 new molecular entities were launched in key markets. Overall, the contribution to global market growth by products launched from 2001 to 2005 reached $13.5 billion in 2006.
Notable high-potential product launches in 2006 included Gardasil, the first vaccine to prevent cervical cancer; Januvia, the first-in-class oral for Type II diabetes; and Sutent for renal cancer. “There have been some exceptional advances in medicine, but public policy will continue to be the greatest influence in driving decisions on health care spending,” says Aitken. “To garner support for innovative new drugs, the industry needs to better articulate the value of its medicines - demonstrating and quantifying the ability of therapies to reduce total health care costs, increase economic productivity, improve the quality of life and extend life itself.”
Growth in the R&D pipeline remains strong, especially in the number of products in Phase I and Phase II clinical development. At the end of 2006, some 2,075 molecules were in development, up 7 percent from 2005 levels, and up 35 percent from the end of 2003. In addition, a promising range of drugs are now in Phase III clinical trials or pre-approval stage, including 95 oncology products, 40 for viral infections and HIV, and 27 for arthritis/pain. Of the total pipeline, 27 percent of these products are biologic in nature.
Oncologics reached $34.6 billion in sales in 2006, up 20.5 percent. This significant growth, the highest among the top 10 therapeutic classes, was fueled by strong acceptance of innovative and effective therapies that are reshaping the approach to cancer treatments and outcomes. In 2006, innovation in oncology was particularly active, with more than 380 compounds in development. Half of the oncology products in late-stage development are targeted therapies - treatments directed at specific molecules involved with carcinogenesis and tumor growth. “Targeted therapies have revolutionized the way cancer is being treated - opening up the possibility that many forms of the disease can be fought through long-term maintenance therapy,” says Titus Plattel, vice president, IMS Oncology. “These therapies are helping to win individual battles against cancer, enabling us to think of it as a chronic illness, rather than a life-ending one. With the industry’s innovation and ongoing scientific advances, growth in targeted therapies will continue to be very strong and the outcomes even more impressive.”
In 2006, North America, which accounts for 45 percent of global pharmaceutical sales, grew 8.3 percent to $290.1 billion, up from 5.4 percent the previous year. This strong growth was due to the impact in the U.S. of the first year of the Medicare Part D benefit and the resulting increase in prescribing volume, as well as solid 7.6 percent growth in Canada. The five major European markets (France, Germany, Italy, Spain and the U.K.) experienced 4.4 percent growth to $123.2 billion, down from 4.8 percent growth in 2005, the third year of slowing performance. Sales in Latin America grew 12.7 percent to $33.6 billion, while Asia-Pacific (outside of Japan) and Africa grew 10.5 percent to $66 billion.
Japan experienced a 0.4 percent decline from a year earlier, to $64 billion, the result of the government’s biennial price cuts. Pharmaceutical sales in China grew 12.3 percent to $13.4 billion in 2006, compared with a 20.5 percent pace the prior year. This slowdown in growth was due to the government’s introduction of a campaign to limit physician promotion of pharmaceuticals. India was one of the fastest-growing markets in 2006, with pharmaceutical sales increasing 17.5 percent to $7.3 billion.
“Last year, India transitioned from a developing market to an emerging one, with many multinational pharmaceutical companies tapping into the huge potential this market offers,” says Ray Hill, IMS’s general manager, global consulting. “Several factors, including the acceptance of intellectual property rights, a robust economy and the country’s burgeoning health care needs have contributed to accelerated growth in that country.”
Overall, 27 percent of total market growth is now coming from countries with a per-capita gross national income of less than $20,000. As recently as 2001, these lower-income countries contributed just 13 percent of growth.
Despite continued expansion of the pharmaceutical market, underlying dynamics continue to alter the landscape. In 2006, products with sales in excess of $18 billion lost their patent protection in seven key markets - including the U.S., which represents more than $14 billion of these sales. With high uptake of lower-cost therapies replacing branded products in classes such as lipid regulators, antidepressants, platelet aggregation inhibitors, antiemetics and respiratory agents, generics will assume a more central role as payers seek to restrict the growth of health care expenditures. Another factor influencing the market is the increasingly active role of patients as they take charge of their health and demand greater access to therapies that will improve or prolong their lives.
“To sustain growth, pharmaceutical companies need to stay ahead of the dynamics that are rebalancing the marketplace worldwide,” Aitken says. “This requires a sharper focus on realizing productivity gains from their sales, marketing and launch investments, a comprehensive assessment of their R&D and portfolio strategies to support opportunities in both emerging and mature markets, and a commitment to better demonstrate the value of their medications among key stakeholders.”
Total global pharmaceutical sales include audited and estimated unaudited information. These pharmaceutical sales are derived from IMS audits, which cover 94 percent of the market, while the remaining 6 percent are estimates derived from IMS Market Prognosis. Growth in sales is measured in constant dollars, enabling analyses without the influence of fluctuating currency exchange rates. Pharmaceutical sales figures are measured in current U.S. dollars, include prescription and certain over-the-counter data, and reflect ex-manufacturer prices. For more information visit www.imshealth.com/media.
Caribbean immigrants are brand-loyal
The Caribbean-American population continues to experience tremendous growth, as does its influence on American culture, according to a report compiled by the Hunter-Miller Group, a Chicago research firm.
In 2006, President Bush approved designating June as Caribbean Heritage Month, noting that, “For centuries, Caribbean-Americans have enriched our society and added to the strength of America.” Caribbean-Americans come to the United States with a strong work ethic and desire for a better life for themselves and their children. They are generally well-educated, middle-class and loyal consumers.
The steady influx of immigrants from the Caribbean has fueled the growth of black people in the United States. Their influence on U.S. culture has expanded beyond food and music to politics and social action. They are proud of their heritage and maintain strong ties to their home countries. Caribbean-Americans view themselves as black, not African-American. Therefore marketing campaigns targeting African-Americans usually do not translate over to the Caribbean market. The large cultural celebrations of Caribbean-Americans held around the country are ideal opportunities to show support for this growing consumer segment.
Between 2000 and 2003, the U.S. admitted 356,958 immigrants from the Caribbean. The top five countries those immigrants arrived from are: Cuba (86,110); Haiti (82,066); Jamaica (59,675); Trinidad & Tobago (23,249); and Barbados (3,027).
Caribbean-Americans are heavily concentrated on the East Coast. The top five metro areas where they reside are: New York City (25.7 percent of black populations; 6.1 percent of total metro) Miami (28.5 percent of black population; 6.8 percent of total metro); Fort Lauderdale, Fla. (29.6 percent of black population; 1.8 percent of total metro); Boston (25.6 percent of black population; 1.8 percent of total metro); and Nassau-Suffolk, N.Y. (25.5 percent of black population; 2.2 percent of total metro).
Their primary reasons for migrating to the United States are: 1) reunification with family, 2) upward mobility, and 3) seeking adventure.
The average Caribbean-American lives in a neighborhood where the median income is $41,328 versus $35,679 for the average African-American. The average Caribbean-American lives in a neighborhood where 49.8 percent of the residents are homeowners versus 53.1 percent for the average African-American. The average Caribbean-American lives in a neighborhood where 20.3 percent of the residents are college-educated versus 17.5 percent for the average African-American.
Blacks from the Caribbean tend to live segregated from whites and African-Americans. They have strong national identities but gradually assimilate. Although their primary language is English, many Caribbean-Americans also speak French or Spanish.
They are brand-loyal in their home country due to the lack of available brands. This loyalty remains when they move to the United States. According to an August 2003 Black Diversity Study by University at Albany and State University of New York, Caribbean-Americans are loyal buyers of consumer goods, annual vacations and personal homes. Brand loyalty is bolstered by community involvement and corporate sponsorship.
Caribbean-Americans are hard-working and take pride in financially supporting loved ones left behind in their home country. Often they are the sole source of income for their families in their home country. For example, World Bank estimated remittances accounted for 52.7 percent of Haiti’s gross domestic product in 2004.
Being from countries where blacks are the majority, Caribbean immigrants have had less personal experience with racism of the kind that American blacks have faced. Therefore they expect less racism and view their interactions with whites as being based on their individuality rather than on their racial characteristics. For more information visit www.huntermillergroup.com.
Young financial services consumers still want the personal touch
Raised in an age of evolving technology, many young consumers are still banking the way their parents historically have done, according to a report by Chicago researcher Mintel. The firm found that only 33 percent of consumers 18-34 are using online banking services. In addition, 37 percent of those ages 18-34 say that “better customer service” would cause them to switch banking providers.
With numerous financial service options available, Mintel’s research also shows that younger consumers still have concerns about the security of online banking. Some 40 percent of those who do not use online banking state it is because they “don’t trust transactions on the Internet.”
“Financial services companies continue to elevate their level of safety and security messaging to their consumers, but it is interesting that the Echo Boom and Gen X groups have not necessarily had their fears laid to rest,” says Susan Menke, senior financial services analyst for Mintel. “The fact that many of them still rely upon human interaction for their banking is actually surprising, given the fact that these generations have grown up with the Internet already being a staple in American culture.”
In addition, with 80 percent of respondents in the 18-24-year-old range and 83 percent of 25-34-year-olds owning debit cards, credit card ownership has been dropping in recent years for these age groups. However, contactless credit cards provide a new outlet for attracting new consumers, with over 60 percent of consumers in this age range showing interest in the newer option.
“Younger consumers understand that many of their parents have dealt with credit card debt, specifically during the boom of these types of products and services,” says Menke. “Because they have been able to see older consumers dealing with potential debt challenges, it has made some younger consumers more cautious when it comes to using credit cards. Over 70 percent of respondents in the 22-24 age range stated that they do not like the idea of being in debt, and that can significantly impact their relationship with credit card companies.”
Consumers in this group are looking more to the future, with more than a third of respondents in the 18-34-year-old range stating that they already have a retirement savings account of some kind. Approximately a third of these consumers also have high expectations from the financial services industry, as they continue to look for quality personal service, either with or without competitive fees and interest rates or other bank offerings. For more information visit www.mintel.com.