In the current decade, the global
pharmaceutical industry grew the
slowest in CY2008, registering a mere 4.8% y-o-y growth to $773 bn.
The US and Europe, which constitute 73% of the global market, grew by a mere
1.4% and 5.8% respectively during the year. On the other hand, the emerging
markets continued to clock double digit growth. The primary reason for the
sluggish pace of growth in the regulated markets was the increasing
generics penetration and decreasing R&D productivity. The global generic
industry was valued at $78 bn in CY2008, with generic penetration increasing by
16% in the US to 63%, from 47% in CY1999. Going ahead, the total value of
products due to go off-patents over the next six years is in excess of $250 bn, and
penetration of generic drugs in the regulated markets is expected to
increase further. Hence, the global generics market is expected to register a CAGR
of around 10.5% over CY2007-12E, outperforming the estimated
industry CAGR of around 5.5% in the mentioned period. On the R&D front, although
the spend has more than doubled from $53 bn in CY2000 to $129 bn in CY2008,
the number of New Chemical Entity (NCE) approvals per year has been in the
same range. As a result, the cost of developing new drugs has increased from $1.1 bn
in CY2004 to $1.4 bn in CY2008. Consequently, the pressure on global
pharma companies to cut costs is much greater now than it was a few years ago to
sustain the growth momentum. The global pharma companies have identified
the following areas to continue on the growth path:
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