BMI View: Health expenditure in the US is forecast to increase by more than 50% over the next decade. A common misconception is that drug companies and medicine price hikes are accountable for this rise and the downward pressure it allegedly puts on prosperity. Latest data shows that healthcare accounts for 17.5% of GDP in the world's largest economy, while in most other developed states this figure is approximately 10%. In reality, expenditure on pharmaceuticals only accounts for a small component of overall health spending in the US, and that this proportion will actually decrease over the next 10 years.
Headline Expenditure Projections
Pharmaceuticals : USD333bn in 2015 to USD348bn in 2016; +4.3% growth. Market forecast revised downwards since Q 2 16 due to consideration and incorporation of new macroeconomic data.
Healthcare : USD3,139bn in 2015 to USD3,293bn in 2016; +4.9% growth. Forecast revised downwards since Q216 due to consideration and incorporation of new macroeconomic data.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||309.860||333.400||347.780||358.960||370.570||382.600||395.010|
|Pharmaceutical sales, % of GDP||1.79||1.86||1.85||1.82||1.80||1.78||1.76|
|Pharmaceutical sales, % of health expenditure||10.4||10.6||10.6||10.4||10.3||10.1||10.0|
|Health spending, USDbn||2,985.750||3,139.180||3,292.690||3,445.370||3,605.150||3,771.690||3,945.690|
The US has a Risk/Reward Index (RRI) score of 83.9 out of 100 for Q316. This is slightly above the 82.8 recorded in Q216. The high RRI score recorded by the US underlines the pharmaceutical market's unassailable status as the most lucrative globally. This is due to unparalleled healthcare access, considerable spending power, a high burden of disease, minimal market access barriers and intense company activity. The key risks to this positive outlook are the increasing influence of pharmacy benefit managers and greater regulation, such as the Branded Prescription Drug Fee.
Pfizer announced that the merger agreement between Pfizer and Allergan, initially entered into in November 2015, was terminated by mutual agreement of the companies. The decision was driven by the actions announced by the US Department of Treasury on April 4 2016, which the companies concluded qualified as an 'Adverse Tax Law Change' under the merger agreement.
We updated our US healthcare expenditure forecast following the recent release of confirmed data from the WHO and incorporation of the latest macroeconomic considerations. Spending on medical services is now expected to increase from USD3,139bn in 2015 to USD4,936bn in 2025, equating to a 10-year compound annual growth rate (CAGR) of 4.6%. This projection is slightly above the previous figures of USD3,121bn in 2015 and USD4,865bn in 2025 (CAGR of 4.5%).
AARP, a non-profit, non-partisan organisation focused on people aged 50 and above, released a report entitled, 'Rx Price Watch Report: Trends In Retail Prices Of Prescription Drugs Widely Used By Older Americans, 2006 To 2013'. The report found that retail prices for a combined set of widely used prescription drugs have consistently increased faster than general inflation in every year from 2006 to 2013.
BMI Economic View
US economic growth will decelerate in 2016 on the back of a contraction in the oil sector as low prices erode profit margins and see investment in the industry fall significantly. In the latter half of the year, growth will head higher as the oil sector bottoms out while consumer spending grows.
BMI Political View
Presumptive Democratic nominee Hillary Clinton will likely be the next president of the US, given that her opponent, Donald Trump, will be unable to sufficiently expand his narrow base of support. Clinton will broadly continue the policies of President Barack Obama, leading to only modest changes for the US' business environment and economic trajectory through 2020.
The United States Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's United States Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the United States pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for United States, to test other views - a key input for successful budgeting and strategic business planning in the American pharmaceutical and healthcare market.
- Target business opportunities and risks in the American pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in United States.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.