With IMS Health's annual forecast for the pharma industry predicting slower approvals, more black box warnings and the continuation of the 'wave of genericization,' the shift by pharma firms to refocus and reinvent themselves will need to move on apace in order to secure their position in a changing market.
The pharmaceutical market intelligence firm released its annual forecast yesterday, predicting growth for the industry at five to six per cent over the course of 2008, with sales expanding to $735-745bn (€509-516bn).
While these figures by no means suggest the industry is on the brink of collapse, growth has dropped from the six to seven per cent rate of 2007, and IMS predicts increasing challenges for the sector over the next year.
The industry is hardly unaware of the choppier waters it finds itself in at present, as evidenced by the extensive cuts, closures and restructuring efforts cutting a swathe across the sector.
IMS has reiterated the concerns of the industry in its forecast, referring to 2008 as "an important inflection point for the global pharmaceutical market," marking the first time that there will be a decline in sales for primary care driven drugs and the first time that the seven largest markets will contribute just half of overall market growth.
The US is set to experience an all-time low in pharmaceutical sales growth over 2008 according to IMS, managing no more than 5 per cent growth over the year. This figure also reflects the growth expected in the five largest European markets, with Japan forecast to grow by just one to two per cent.
Emerging markets, on the other hand, are unsurprisingly expected to grow at a much healthier rate, with the seven "pharmerging" regions of China, Brazil, Mexico, South Korea, India, Turkey and Russia expected to grow 12-13 per cent to $85-90bn.
With some pharmaceutical firms already being burnt by patent expiries and loss of revenues, the IMS report also comments on the "wave of genericization" that will continue to impact the industry.
Drugs with around $20bn in revenues will face patent expiry in 2008. Top-selling brands such as Risperdal (risperidone), Fosamax (alendronate), Topomax (topiramate), Lamictal (lamotrigine) and Depakote (divalproex) are all expected to lose exclusivity in one or more major markets around the world next year.
These losses will help push the generics sector, expected to grow by 14-15 per cent next year and hit over $70bn. According to IMS, over two-thirds of all US prescriptions written over 2008 are expected to be for generic products.
Increasing generics competition within the biotech sector is also anticipated as biosimilar versions of epoeitin alpha are marketed across Europe.
Another key factor affecting the pharmaceutical market is likely to be safety issues surrounding medicines, according to IMS.
Over 2008, the analysts expect more independent meta-analysis of widely used drugs, as well as risk assessments based not only on scientific data but also bringing in the views of legislators and juries.
With the US Food and Drug Administration (FDA) having brought in its Risk Communication Committee over 2007 to improve risk communication to the public, and likely to make critical decisions about the agency's post-marketing surveillance approaches during 2008, pharma firms may see a change in the regulatory aspects of their activities.
"IMS anticipates more limited claims for newly approved medicines, the application of more "black box" warnings on labels, more clinical evidence required by regulators, and slower approvals," says the report.
"Overall, this raises the level of uncertainty faced by companies, as well as their ability to make products available to patients."
This uncertainty is further compounded by the increased intellectual property challenges that firms are likely to experience on all fronts. With many IP issues under review in 2008, uncertainty about the "fundamental model underpinning the R&D-based pharmaceutical industry" is likely to be a concern for many companies.
The essential message that the IMS report seems to drive home is that it certainly isn't going to get any easier for pharmaceutical manufacturers over the next 12 months. The preparations that many companies are already making to steel themselves for the years ahead are somewhat necessary for many to be able to compete effectively in a changing marketplace.
"These indicators paint the stark reality of a marketplace in transition," said Murray Aitken, senior vice president of Healthcare Insight, IMS.
"The actions being taken by companies to reinvent themselves will need to continue at an accelerated pace."