US pharma market growth fueled by a small number of products (again)

A year ago, we looked at data from IMS Health showing how specialty drugs were boosting the fortunes of an industry still reeling from the body-blows of high-dollar patent expirations in preceding years. The figures were encouraging from a top-level view, but the reliance on a handful of products with questionable growth potential (Hep C treatments) left us asking if this was sustainable.

That question is still on our minds. Of course, no one thought last year’s results were a complete aberration, and the new report from IMS shows the trend continues in a healthy fashion (free download with registration). Total US drug spending grew 12.2% to $424.8 billion. The increase in the specialty drug sector was nearly twice that – 21.5% -- and, at $150.8 billion, the category now accounts for more than a third of all domestic drug spending and three-fourths of new brand drug spending. Given that this category has gone from 24% of the market to 36% in just three years, and account for 70% of spending growth over that period, IMS is right, if a bit understated, to call it “one of the most dynamic segments.”

Like last year, Hepatitis C and oncology lead the way. Along with autoimmune treatments, these products account for $19.3 billion of the overall $46.2 billion rise seen by the industry as a whole – with $6.6 billion of the increase coming from Hep C alone. By comparison, spending on oncology treatments as a whole increased by $6 billion, led by new offerings in the form of PD-1 and protein kinase inhibitors.

There are signs that the Hep C wave is cresting, however. As the authors of the IMS report state that “new therapy starts peaked in March 2015 and have started to slow as the majority of patients most in need have sought and received treatment.”

For now, we stand by our statement from a year ago, when we cautioned that the top-line figures did not necessarily herald a new Golden Age for pharma. As we stated then, “these phenomenal revenue figures are really derived from a handful of extremely successful drugs rather than a broad-based industry turnaround.”


Todd Clark
Todd Clark

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