- Pharmaceutical companies are facing a "squeeze on pricing" that will likely dampen future sales, according to a new assessment.
- In the 10th installment of its World Preview report, market intelligence firm EvaluatePharma anticipated global drug sales will reach $1.06 trillion in 2022, down from last year's $1.12 trillion and the first time in the report's history that researchers lowered the long-term projection.
- Pricing pressures, such as increased negotiating power from pharmacy benefit managers (PBMs) and uncertainties surrounding the Trump administration's stance on drug costs, were a core reason for the decline. Additionally, drugs falling off patent could lead to the loss of nearly $200 billion of sales.
For years, drugmakers were able to rely on the steady price increases for some of their products to offset R&D costs and generate attractive returns on investment. But tides are shifting and some companies may be left stranded.
Though many pharmaceutical developers continue to reap benefits of costly drugs, pushback from consumers, PBMs, payers and lawmakers has become much stronger as of late. In order to stay on formulary lists and in good favor with the masses, companies such as Eli Lilly and Johnson & Johnson have given peaks behind the curtain of drug pricing decisions. Others, including AbbVie, Allergan and Novo Nordisk, have pledged to keep price hikes in the single-digit percentages.
Moves like these, however, may not be enough to fully protect bottom lines across the industry, as evidenced by this latest report.
In addition to drugmaker's slipping negotiating power, biosimilars and high R&D costs stand to curb long-term revenues. The copycat treatments, for instance, could erode up to 54% of sales for the industry's current best-performing biologics, according EvaluatePharma. Meanwhile, R&D expenses are slated to have a compound annual growth rate (CAGR) of 2.4% through 2022, and biotechs and pharmas can expect to spend about $5.1 billion per new molecular entity.
On a more positive note, World Preview 2017 echoed recent research from Ernst & Young that concluded the industry has been performing well in spite of the pratfalls and has promise moving forward.
For instance, EvaluatePharma anticipated a 6.5% CAGR for prescription drug sales between 2017 and 2022. About one-third of that growth should come from orphan medications — sales for which could hit $209 billion by that latter date — and therapeutic areas such as immuno-oncology will continue to generate interest and strong returns.
Noteworthy products anticipated to drive sales include Bristol-Myers' Squibbs Opdivo (nivolumab), Merck's Keytruda (pembrolizumab), Roche's Ocrevus (ocrelizumab) and Sanofi and Regeneron's Dupixent (dupilumab). There are also a host of highly-anticipated pipeline candidates that should pump up incomes, such as Biogen's Alzheimer's drug aducanumab and Johnson & Johnson's cancer medication apalutamide.
As for which drugmaker will come out on top in sales over the next five years, EvaluatePharma says it's too close to call.
"At the moment no one pharma company is forecast to stand head and shoulders above its peers," the company said in the report. "Only the slenderest of margins will exist between the top three companies in 2022, current forecasts suggest. Novartis is predicted to return to the top spot with expected sales of $49.8bn in 2022, compared with $49.7bn for Pfizer and $49.6bn for Roche. It would take only one high profile failure to change these rankings."