Our last post on the pharmaceutical predictions for 2016 was so popular, we’re back to bring you part 2 of this year’s pharma trends. Emerging trends in this post include specialty drug spending, mergers and acquisitions, the need for transparency, the growth of biosimilars and generics, and the protection of intellectual property. In Part I of pharma trends, we discussed pricing pressures, empowered patients, personalized medicine, tech giants, and the digital movement. Be sure to check out Part I of pharma trends and predictions for 2016 if you haven’t already!
1. Specialty Drug Spending
Specialty drugs are prescription medications designed to treat chronic and complex diseases such as cancer, rheumatoid arthritis, and solid organ transplant just to name a few. A great percentage of development and spending in the pharma industry has shifted significantly to specialty drugs. Due to an increasing demand for specialty drug therapies, it is predicted an increase of 40% of all prescription drug spending will occur in 2016 and forecasted to reach 50% by 2018.
The industry’s focus has shifted from traditional drugs to specialty drugs. Compared to traditional drugs, specialty drugs have an increased chance for product approval and favorable pricing. They target complex diseases that place high in value but low in competition. Approvals for medicine targeted at rare diseases are bringing new options and renewed hope for patients whose needs have gone unmet for so long.
2. The Need for Transparency
The advancement of the current pharmaceutical industry has blessed us with a great amount of data and information. However, an increase in data means greater need to share and integrate useful information for research and development. By combining data together, organizations can connect information together and reduce duplication of efforts. The pharma industry can then naturally pool their research and development resources together to develop effective, profitable, and innovative new medicines at a lower cost to patients.
Recent efforts to promote transparency in the pharma world include the AllTrials initiative. The AllTrials was a petition signed by 520 organizations (physician groups, patient advocates, government regulatory bodies, and large pharmaceutical company, GlaxoSmithKline) for all results of clinical trials to be published and shared. It is believed that by making it clinical trial data publicly available, duplication of trails can be avoided, and innovation and developed of new medicines by the pharma industry can be encouraged.
3. Mergers and Acquisitions
The pharma sector is currently hot and ripe for mergers and acquisitions. Reasons being consolidations relieve pricing pressure, increase existing product portfolios, increase capabilities, and brings newfound confidence when entering new or emerging markets. From 1995 to 2015, sixty pharmaceutical companies in the world have merged to ten. These include Pfizer and Allergan merger in 2015 ($150 billion) and Roche’s acquisition of Genentech in 2009 ($46.8 billion).Currently, Lonza, the leading worldwide supplier of biopharmaceuticals headquartered in Basal, Switzerland, has offered an acquisition proposal to Catalent, a global provider of drug delivery technology and development solutions for drugs, biologics, and consumer health products, located in Somerset, New Jersey, USA.
4. Increased Growth of Biosimilars and Generics
The patents of original medication are expiring. This has caused increased competition by generic medication and the demand for generic drugs is ever-increasing as patients look for alternatives to the original medication to reduce costs. In the United States, generic drugs make up 70% of the pharmaceutical market in terms of volume. It is globally predicted a 36% increase in volume (valued at $421 billion) by 2017. For example, the loss of patent protection (2014-2022) for 11 established biologic products.
Usage and growth of biosimilars are also surging. Biosimilars are biological products which are similar but not identical to the originator. Development and sale of biosimilars are beginning to accelerate and expected to reach $35 billion by 2020. This is again due to the loss of patent protection (2014-2022) for 11 established biologic products.
5. Intellectual Property Protection
Pharmaceutical companies spend billions of dollars on research and development every year for development of patent drugs. This makes their intellectual property an attractive target for criminal activity. For example, an IP was stolen from an American medical device company that was in the midst of developing a device they’d worked on for over five years. The information was transferred over to China and resulted in the Chinese competitor launching the same device faster than the American company. In these unfortunate situations, organizations lose a lot of money and effort spent developing a drug. The need to protect IP concerning new cures, drugs, and devices is clearly a top priority. Current steps and measures to ensure IP protection include the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement where all World Trade Organization members have agreed to ensure a policy that upholds patents as a system to support research for new medicine.