Life Sciences Global Trends 2012

Pharmaceutical, Medical Device and Biotech Report

2011 was not an easy year for the global economy, and it presented many challenges for the life sciences industry. Slower than expected recovery in the US economy coupled with the unfolding of the financial crisis in the Eurozone has significantly impacted businesses worldwide, and it’s unlikely these challenges will dissipate in the immediate future.

The last year has seen patents expiring on some of the world’s biggest selling medicines, including Lipitor, and many more will go off patent in 2012 leaving the path open for generics to take over the bonanza.

With the prospect of further patent expirations, severe austerity measures and unproductive pipelines, drug companies are reconfiguring their research and development operations. Many have joined the shift to open innovation and strategic partnerships, while others are co-founding start-ups to get access to the assets early on, in efforts to find new drug candidates and rebuild pipelines.

However, the enduring trend in pharmaceutical research and development sees activity shift from the West to the East. With its lower costs and proximity to emerging markets, China is quickly becoming the rising star of pharmaceutical R&D.

The emerging and fast growing economies of the BRIC countries (Brazil, Russia, India & China) have also drawn the attention of almost all the key players as they strive to counter the relatively flat growth in developed markets.

Expanding government healthcare coverage, aging populations, a growing prevalence of chronic diseases and an emerging middle class, have led to a combination of public and private ability to spend on healthcare. This in turn has led to considerable growth opportunities – particularly for the medical devices sector.

The global medical device market is estimated to be worth US$300bn and continues to grow with markets such as India and China expected to deliver double digit growth over the next five years.

Keeping that growth in check are raised cost effectiveness barriers leading to reimbursement restrictions. Pricing and reimbursement cuts were key elements in the austerity measures in many of the developed countries looking to pay down their debts.

Added to this are signs that growth in the BRIC economies is moderating. The weaker outlook for growth is raising concerns as these countries are major engines of regional and global economic growth. The effects of an increasingly integrated global economy are plain to see.

In the long run though, the global pharmaceutical market is expected to grow by a CAGR of 6-8% to over US$1 trillion by 2014, and medical devices is anticipated to grow by 4-6% over the next few years. While anticipated growth in the developed markets is forecast to be slower than the previous five years, emerging markets are expected to grow by 13-17% to 2015 and this is where the industry continues to invest heavily.