The news last week out of IMS Health was sobering. The pharma industry in the U.S. grew an anemic 3.8% in 2007, totaling $286.5 billion. While that seems like a whopping big number, it’s still pretty small when you figure that pharmaceuticals are only about 10% of the entire healthcare spend (estimates range from 9-12%).
IMS says the meager sales growth is from the increasing number of generics, a rash of patent expiries of blockbuster drugs, a trickle of FDA approvals reflecting the agency’s new stance on risk-vs-benefit, and massive safety issues in 2007.
“In 2007, the U.S. pharmaceutical market experienced its lowest growth rate since 1961,” said IMS’s Murray Aitken, Senior Vice President of Healthcare Insights. “The moderating growth trend that began in 2001 resumed last year following the one-time impact on market growth in 2006 from the implementation of Medicare Part D. Last year, we saw a continuing shift away from primary care classes to biotech and specialist-driven therapies, which grew at a 9 percent and 10 percent pace, respectively. Among the leading therapy classes, oncology drugs continued their rapid growth, at 14 percent — the result of innovative new medicines, expanded indications and accelerated uptake of products to fill unmet needs.”
In financial markets, you usually hit the bottom when the news is the worst. And the news can’t get much worse for pharma. Could 2007 be the bottom of pharma’s decline?
