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August 08, 2016
Pharma a​ccessibility and affordability are under pressure
By: Anne O'Riordan


We compared current forecasts for developed market pharmaceutical net sales growth with analyst consensus sales forecasts for recent and upcoming launches, and noted “the affordability gap” between the two. Analysts’ 2015-2020 sales forecasts for recent and upcoming NME launches were $258 billion, whereas developed markets are forecast to see only $87 billion in pharma budget increase, along with $121 billion in cumulative generics savings, totaling $208 billion. With most of the forecasted spending on NME launches coming from developed markets, this $50 billion gap between market spend and forecasted sales, is particularly concerning when considering the significant economic and demographic pressures on health budgets. 

With drug spending as a proportion of total health spending creeping up, payers and governments will continue to seek greater savings from generics (including biosimilars) and larger price rebates. Reimbursement is also continuing to shift towards prioritizing those new products that differentiate most clearly on patient health and economic outcomes, as payers seek to further control drug spending. Similarly we are seeing drug accessibility falling across many developed markets, with new innovation taking longer to reach patients.


Looking at the performance of a basket of over 100 newly launched drugs in recent years, and their sales in first two years vs analysts’ projections made at the time of their approval, we see a surprising result. Nearly a third significantly under-performed, 50 percent or more below target, and what’s more this proportion has grown over time. Equally there is a roughly similar proportion of new drug launches that have exceeded Analyst target—highlighting the growing divide between new launch winners and lowers.

In this tougher affordability and accessibility climate, there will likely be clear new launch winners and losers in the battle to command a share of fixed healthcare funding in increasingly crowded and price-competitive therapeutic categories. Successfully bringing new products to market will require more than just great innovations; pharmaceutical companies will also need to develop operating models that can turn new science into measurable delivered patient value.

For more information on these findings, please read our latest High Performance Business Research: Affordability and value—the economics of pharma’s new science.

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