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What are the drivers of market growth in the pharmaceutical industry?
Hello, and thank you for your question about the drivers of market growth in the pharmaceutical industry. The short answer is that we have compiled a list of ten drivers of market growth in the pharmaceutical industry. Below you will find a deep dive into my findings in the form of a short, ordered list.
1. BRANDED DRUGS and SPECIALTY MEDICINE
73 new branded drugs were introduced to market in 2015. The market for branded drugs is expected to reach $91 billion by 2020. Within branded drugs, 75% of spending is on specialty drugs (initiated by specialists and requiring physician oversight, often high-cost). Of total drug spending, specialty brands represent 36%.
2. OFF-PATENT DRUGS
Several drugs went off-patent in 2015, which allowed the US generic drug market size to reach $70 billion. Healthcare reforms have helped increase the use of generic medicine as well, helping to add to the increased market size.
3. OTC GROWTH
Over the counter medications are also seeing a growth in sales. This has been linked to the aging population requiring more OTC medications and consumer behaviors that encourage self-medication instead of visiting a doctor.
4. HEALTHCARE REFORM
The healthcare legislation passed in 2010 elevated patient demand for pharmaceuticals, although pharmaceutical companies also saw increased taxes tied to rebate programs. These companies passed the cost on to buyers in the form of higher drug prices.
5. HIGHER DRUG PRICES
When companies passed the taxes onto to customers, some medications saw a large increase in price. The Epipen, for example, raised in price by 400% since 2009. While this has raised a host of other challenges, it has played a role in the increasing market size of the pharmaceutical industry.
6. CHANGING DRUG STATUS
Another factor leading to the rise in OTC medications is that many drugs are becoming re-classified, shifting from a prescription-only medication to an over the counter medication. As that happens, there is an increase in the market size of generic medication that correlates. New medications coming onto the market make up the difference in prescription medication market size.
7. HEALTHCARE and TECHNOLOGY CONVERGENCE
Technology is increasingly becoming a part of healthcare. Apps that help users take their health in their own hands, so to speak, have flooded the market, as well as other digital innovations in health, that are increasing consumer awareness and growing the pharmaceutical market.
8. INNOVATIONS IN ONCOLOGY, AUTOIMMUNE, and DIABETES TREATMENTS
Innovations in the fields of oncology, autoimmune, and diabetes treatment will fuel both the US and international pharmaceutical market. Emerging markets will see a steady rise is people seeking treatment for these diseases, while the US is expected to remain on the forefront of technology. Advancements in treatments and prevention will drive market growth.
9. CHRONIC AILMENTS and RARE DISEASES
There is an increasing number of Americans who experience chronic ailments or pain. Chronic illness such as hypertension and mental health issues are a leading driver of the growth in prescription drugs in the US. There is also an increasing market size for pharmaceuticals that treat rare diseases as advancements in pharmaceuticals offer more solutions and advancements in medicine uncover more problems.
10. AGING POPULATION
As our population ages, they are in need of more medical care. Government health programs like Medicaid and Medicare allow a wider range of seniors to be covered. As more of the population ages into the "senior" bracket, they require an increased number of medical services. Additionally, advancements in health means that people are living longer and requiring services for a longer period of time.
CONCLUSION
To wrap it up, ten drivers of market growth in the pharmaceutical industry are branded drugs, off-patent drugs, OTC growth, healthcare reform, higher drug prices, changing drug status, the convergence of healthcare and technology, innovations in medical treatment, chronic ailments, and an aging population.
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