Though pharma growth slides, blockbusters reach new record

Though pharma growth slides, blockbusters reach new record

The global pharmaceutical market failed to reach double-digit growth in 2004 for the first time in about nine years. Key reasons for this focused on concerns over drug safety, pricing and competition from generic drugs as major products had their patents expire.
Let’s take a look at how the market did. This is according to the estimates of IMS Health, a pharmaceutical market research firm:

If the overall growth of the pharmaceutical market slowed down, one important milestone was reached: surpassing $500 billion in sales for the first time. China is among the fastest-growing markets in the world. It ranked ninth in 2004 and is expected to achieve the No. 8 position in 2005.
According to IMS, the global market through 2008 should grow between 7 percent and 10 percent with the U.S. market matching this growth. Overall prescriptions grew 3.2 percent in the U.S., which means that the remaining growth came from companies increasing their prices on average about 5 percent.
Generic drugs represented more than 30 percent of the volume of drugs in the U.S. This was also true in Canada, Germany and the U.K. Generics, however, only grew 10 percent in 2004. This represents a slow down from previous years.
According to IMS and MedAd News, the 10 largest drug classes accounted for one-third of the total global market (or $173 billion). Here are the leading classes:
• Cholesterol and triglyceride reducers with sales of $30 billion and growth of 12 percent
• Anti-ulcer drugs was the next-largest category with sales of $25 billion and growth of 1 percent
• Anti-cancer drugs was the next-largest category with sales of $24 billion and growth of 17 percent
Another interesting development was the growth of combination drugs (drugs that contain more than one drug in a pill, tablet or liquid). This is a significant trend as the FDA has been against such combinations for years. The need to take complementary therapy in a number of classes of drugs as well as overall patient compliance has driven this trend.
Of real significance is the growth of blockbuster drugs. Remember that the definition of a blockbuster drug is annual sales of $1 billion or more. Some 20 years ago, there were less than a handful of blockbuster drugs. In 2004, there were a record 82 blockbusters. This beat the prior year by 13 drugs.
Of the 82 blockbusters, 11 have come from biotech companies.
Of course, we now have two new categories. We will call them mega blockbusters (or drugs that have sold more than $10 billion in sales per year) and super blockbusters (or drugs that have sold more than $2 billion each annually). There is one drug in the first class and 26 drugs in the second group. Let’s take a look:

It’s kind of amazing that these 27 drugs represent about 16 percent of the total world pharmaceutical market (or more than $88 billion in sales).
It’s clear why Pfizer is king of the hill with five of the 27 mega and super blockbusters. The fight for second place is heavily contested with Merck having four mega blockbusters and Johnson & Johnson also having four mega blockbusters. Amgen has two mega blockbusters, and if you take into account that Procrit is really its drug, in reality they have three mega blockbusters.
On top of the five mega blockbusters, Pfizer still has five more blockbusters so its dominance in the market is overwhelming.
While having such global product franchises is critical to market leadership and dominance, the company’s loss in rank and profitability can be swift when a drug’s patent expires. This continues the need for Big Pharma companies to restock their product pipelines on a continuous basis with new products that often come from biotech companies. This is another reason why these companies pay big money for interesting products.
See you next week!

Michael S. Rosen is the chairman and CEO of Immune Cell Therapy, a new start-up out of the University of Illinois at Chicago developing cancer vaccines. Rosen is also a founder and board member at the Illinois Biotechnology Industry Organization (IBIO). He can be reached at

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