Industry Trend Analysis - Higher Growth In Emerging Europe To Attract Drugmakers - DEC 2017

BMI View: The greater ability of Western European markets to afford high-value innovative medicines, coupled to the stronger regulatory environments, will continue to attract innovative drugmaker investment. However, growth within these markets will face a multitude of headwinds driven primarily by healthcare payer cost-containment. In emerging Europe, market growth will remain strong given continued improvements to healthcare inequality, although generic medicines will be favoured to maintain sustainable expenditures.

Europe: Pharmaceutical Market Forecast
f = BMI forecast. Source: BMI

Structural Trends

The USD322bn (EUR291bn) European drug market is forecast to post a 3.2% compound annual growth rate (CAGR) at constant exchange rate (CER) terms through to 2021. The USD62bn (EUR56bn) Emerging Europe region will post an 8.9% CAGR through to 2021. In contrast, the USD260bn (EUR235bn) Western Europe region will post a 1.8% CAGR over the same period. Europe's pharmaceutical market will post a five-year CAGR of 2.2% in USD terms and 1.0% CAGR in EUR terms.

Ageing demographics and the continued focus on increasing access to healthcare services - particularly in emerging markets - will continue to boost demand for and consumption of medicines. In response, governments across the region will face challenges in meeting this demand sustainably. Initiatives to boost domestic drug production; increasingly forceful pricing pressures; cross-border collaboration on pricing, reimbursement and procurement; and a focus on cost-effectiveness and generic substitution are trends that are likely to continue over our forecast period. These will, in turn, pose revenue-earning challenges for drugmakers. Nonetheless, despite the heavy focus on generic medicines in markets across emerging Europe, the increasing affordability of medicines will allow for greater access to medicines and in turn, will boost sales growth in the region.

Indicator 2013 2014 2015 2016 2017f 2018f 2019f 2020f 2021f
f = BMI forecast. Source: BMI
Pharmaceutical sales, USDbn 360.454 370.702 323.010 321.870 328.897 336.247 339.977 346.741 358.485
Pharmaceutical sales, USDbn, % y-o-y 4.72 2.84 -12.87 -0.35 2.18 2.23 1.11 1.99 3.39
Pharmaceutical sales, USD per capita 402.0 412.0 357.8 355.4 362.0 369.0 372.1 378.6 390.4
Pharmaceutical sales, % of GDP 1.56 1.58 1.60 1.64 1.64 1.63 1.60 1.57 1.56
Pharmaceutical sales, % of health expenditure 16.9 17.1 17.5 17.4 17.4 17.4 17.4 17.3 17.2