Institute Report
The Global Use of Medicines 2023
Outlook to 2027
Jan 18, 2023
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Report Summary

Reaching a post-pandemic era is an alluring prospect for almost everyone around the world after the disruptions of the past three years. The outlook for global spending on medicines has become clearer as the traumas recede and uncertainties give way to more predictable challenges. Policymakers across developed and emerging economies are shifting from crisis to rebuilding modes with a focus on longer-term issues of sustainability. Complex trade-offs remain, and improved efficiency and quality of healthcare informed by evidence-based decision-making will inform the critical decisions in the coming decade.

The largest driver of medicine spending through the next five years is still expected to be global COVID-19 vaccinations, but leaving aside the pandemic, global spending on medicines continues to be driven by innovation and offset by losses of exclusivity and the lower costs of generics and biosimilars.

In this report, we quantify the impact of these dynamics and examine the spending and usage of medicines in 2022 and the outlook to 2027, globally and for specific therapy areas and countries. We intend for this report to provide a foundation for meaningful discussion about the value, cost, and role of medicines over the next five years in the context of overall healthcare spending.

Key findings:

  • The COVID-19 pandemic continues to impact pharmaceutical markets globally, and is estimated to expand the net cumulative pharmaceutical market by $500 billion from 2020 through 2027
  • Highest volume growth is expected in Latin America, Asia and Africa, driven by a mix of population growth and expanded access. North America and Europe will see very low growth
  • Demand for innovative drugs will drive oncology spending to approximately $370 billion by 2027, almost double the current level
  • Biotech will represent 35% of spending globally in 2027 and will include both breakthrough cell and gene therapies, as well as a maturing biosimilar segment
  • The outlook for global medicine spending has shifted considerably during the COVID-19 pandemic but is expected to be largely similar to the pre-COVID outlook, excluding the spending for COVID-19 vaccines and therapeutics.
  • For non-COVID spending, lower trends in the near-term are expected to be largely offset and by 2027, the cumulative reduction from the pre-pandemic outlooks is expected to be only $4Bn.
  • The most important drivers of lower spending will be those, often asymptomatic, conditions that have disrupted patient engagement and fail to make up the backlog of previously expected usage and spending.
  • Broadly there is a correlation to gross domestic product per capita, with higher medicine use in higher income countries.
  • As countries vary in the cost burden patients directly bear, there is some correlation in the way patients use medicine.
  • The U.S. has the lowest per capita DDD volumes of developed markets, which may be the result of high patient out-of-pocket cost exposure.
  • Global medicine spending — the amount spent purchasing medicines from manufacturers before off-invoice discounts and rebates — is expected to reach $1.9Tn by 2027, increasing at a rate of 3–6% per year.
  • This outlook is excluding the separate impact of spending on COVID-19 vaccines and therapeutics modeled separately (see Exhibits 1–4).
  • Overall growth trends are expected to moderate after the disruptions from the pandemic in 2020 through 2022.
  • Regions around the world are growing following diverging trends, with some more volume driven while others have a greater contribution from adoption of innovation.
  • Countries in Latin America, Asia-Pacific, and Africa and the Middle East are expected to grow more than 10% by volume over the five years to 2027, while spending growth will increase by over 30%, indicating both population-driven volume growth and a shift in the mix of products to more expensive products.
  • China as the world’s second largest country by pharmaceutical spending, will increase volume by 8% in aggregate over five years, while spending will increase 19%, a more modest rate than in the prior years and still embedding a focus on expanding access to novel drugs via the National Reimbursement Drug List (NRDL).
  • The therapy areas with the highest forecast spending in 2027 are oncology, immunology, and anti-diabetics, followed by cardiovascular.
  • Oncology is expected to grow 13–16% CAGR through to 2027 as novel treatments continue to be launched for the treatment of cancer.
  • Immunology is expected to grow slowly in the range of 3-6% due to the launch of biosimilars; while several biosimilars are already launched in Europe, leading to slow growth of the immunology segment, the launch of adalimumab biosimilar in 2023 in the U.S. is further expected to impact growth.

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