United States Pharmaceuticals and Healthcare Report Q4 2009

Despite a downturn in growth rates in the US pharmaceuticals & healthcare markets, the country remains a core component for any company looking to achieve global success. Healthcare spending in 2008 reached US$2.3trn, while sales of pharmaceuticals topped US$309bn.

For BMI's US Pharmaceuticals & Healthcare Report Q409, our new 10-year Drug Expenditure Model has been introduced, giving a longer-term view of potential for sales. By 2018 BMI forecasts that pharmaceutical expenditure will be approaching US$400bn, representing a compound annual growth rate (CAGR) of 2.5%. This, combined with the US's strong regulatory environment, stable political and economic environment and country structure-related opportunities mean that the country is ranked first globally within our Business Environment Ratings.

Much is currently at stake in the US pharmaceutical & healthcare industry. President Barack Obama's healthcare reform is set to dramatically change the industry landscape over the next few years. Among the proposals are: the possible introduction of a government health insurer, which would place significant downward pressures on prices; reviewing the length of exclusivity for biologics and entry for biosimilars, which could tilt the balance of generic and patented market growth; the level of prescription coverage enacted under any universal insurance model; and the introduction of re-imported drug legislation.

Patent expiries for many high value products are set to significantly erode sales for many major pharmaceutical companies. However, due to the complexity of patent files and litigation efforts, calculating the exact entry for generic medicines can be troublesome. The possible ban of pay-to-delay settlements and authorised generics could also provide a major downside for patented drugs.

The shape of economic recovery in the US will also have a major bearing on market dynamics, particularly in the case of over-the-counter (OTC) medicines or prescription drugs, which require substantial co-payments.

The epidemiological profile of the US resembles that of many developed states. BMI's Burden of Disease Database (BoDD) reveals that of the 37.76mn disability-adjusted life years (DALYs) lost to all diseases and injuries in 2008, just 5.13% were accountable to communicable diseases. This is fairly typical for a developed state and is a reflection of the US's generally high access to basic medical care and the effects of Westernised lifestyles causing an increase in the burden of non-communicable diseases, despite beneficial developments in medicine and medical technology.