In 2014 the US pharmaceutical market is said to have been worth approximately $395 billion (with a B). And yup, this is proof of the old saw implicit in the headline. However, … According to the market research and consulting firm Global Data, the projected value of the US pharmaceutical market in 2020 will be more like $550 billion — a 39% growth over the next 5 years.
Joshua Owide, the head of the team that came up with this number, freely admits that the projected number “does represent optimism” and that “the market realities require a bit of caution.” However, one is tempted to wonder just how many 100+ year old market sectors are still growing at a compound rate of something like 5 to 6% per annum!
There is no doubt that this is the sort of compound growth rate that our political lords and masters would just love to see for the entire US economy (regardless of the side of the aisle on which they are seated). Unfortunately, a 39% growth in the entire US economy over the next 5 years is probably not a reasonable expectation.
Gobal Data calls out two specific areas (oncology and diabetes) as being ones in which major growth can be expected in the US pharmaceutical market over the next 5 years. However, there are probably others where there are still major opportunities, specifically including:
- Respiratory disorders — where greater ability to control patients’ respiratory problems (asthma, COPD, etc.) in the long term, with lower risk for side effects, would still offer massive value opportunity
- The non-cancer orphan drug/rare diseases — where there are still well over 6,000 rare disorders for which there are no approved treatments at all (and an increasingly large number of promising drugs in development)
- Common degenerative neurological disorders (Alzheimer’s disease, Parkinson’s disease, multiple sclerosis, etc.) — where a single, really effective treatment could garner a vast market very fast indeed
Having said that, we can’t ignore the very real economic risks faced by the biopharmaceutical industry, one of which we discussed yesterday on this blog site. (How much are we all willing to pay for an extra couple of months of life?) If you want to read another interesting take on that topic, have a look at this article by Howard et al., just published in the Journal of Economic Perspectives!