Media release from Datamonitor

Melbourne, 25th February 2010. Top pharmaceutical and biotech companies face a major slow down in sales growth over 2008-14 according to a new report by independent business analyst Datamonitor. The report title "Pharmaceutical Company Outlook to 2014" considers the forecast performance of the world's biggest pharmaceutical (Pharma) and biotech companies, termed the "PharmaVitae Universe". The analysis reveals prescription sales are expected to rise at a compound annual growth rate (CAGR) of 1.2% out to 2014, compared to a historical growth rate of 10.5% over 2002-08.

The sharp decline in industry growth rate is primarily a result of the generic competition facing many companies, with several blockbuster brands facing patent expiry over the next few years-often referred to as the 'patent cliff'.  

"The major obstacle to the PharmaVitae Universe's continued expansion is undoubtedly the growth of the generics market, eroding sales of major brands and market value. While this will directly impact products facing patent expiry, there will also be an indirect impact to patented brands as they are forced to compete with alternative generics" says Rebecca Whitham, Datamonitor analyst.

Within the Asia-Pacific region, the Japan Pharma peer set, comprised of companies headquartered in Japan, is forecast to face a particularly turbulent time, with patent expiries expected to blight the peer set. Within the PharmaVitae Universe, Japan Pharma will be the worst performing peer set, with a 2008-14 prescription pharma sales CAGR of 0.5%. Furthermore, negative year-on-year sales growth is expected in 2010 and 2012-13.

Several companies are, however, forecast to outperform the PharmaVitae Universe average growth rate. "Companies that have successfully diversified into the biologics sectors of monoclonal antibodies and therapeutic proteins, which-by comparison-are relatively insulated from generic competition, will see a stronger revenue performance" comments Whitham based in London. For instance, Roche will benefit from its early move into the monoclonal antibody market, locking out competitors and gaining full benefit from the sector's high growth.  

Consequently the Big Pharma giant will generate the largest sales increase of all the PharmaVitae Universe companies over 2008-14.

The targeting of niche indications and areas of high unmet need will also prove a lucrative strategy for a handful of companies, namely Mid Pharma contenders Gilead, Actelion and Celgene, which are all expected to achieve double-digit CAGRs over 2008-14. Also those companies that have sought to develop their own generics presence will largely benefit from the growth of the generics market, particularly Big Pharma player Novartis, which leads the field through its dedicated generics division, Sandoz - currently the second largest generics provider in the world.

"Where M&A has acted as the PharmaVitae Universe's biggest growth driver over 2002-08, this unknown quantity will likely continue to play a key role in driving company performance going forward" concludes Whitham. Despite bearing the impact of generic competition to some of the world's biggest pharmaceutical brands, the large-scale M&A witnessed in 2009 will see Pfizer-Wyeth and Merck-Schering-Plough become the first and second largest companies within the PharmaVitae Universe by 2014.