| Indian Pharmaceuticals Takeaways from IMS Health Review of the 2013 US Pharmaceutical Market for Indian Generic | ||
We review the IMS Health Review of the US Pharmaceutical market in 2013 published yesterday and highlight key takeaways for generic companies in India. The review report highlights improving prescription growth (nominal and per capita dispensed prescription), higher spend on branded and unbranded generics, increasing generic utilization trend, and prescription growth for hormonal contraceptives and preventive drugs with no declining costs. These trends should continue to drive growth for the Indian generic players in the US.
· Prescriptions increased in 2013 and so does spending. Total prescription in 2013 increased 1.6% YoY in 2013 in the US (vs. 1.2% in 2012), which as per IMS data is the second consecutive year of improving trend from the flat/declining growth in 2010-2011. On per capita basis, TRx was up 0.9% in 2013 indicating increasing demand for medicines. Spending on medicines was $329bn and increased 3.2% YoY (vs. -1% in 2012) with IMS highlighting that growth in nominal spending is not “a reflection of the access expansions and insurance reforms from the Affordable Care Act, but rather a reflection of cyclical patterns of patent expiries”. Real per capita spending on medicines increased 1.0% YoY in 2013 vs. -3.5% in 2012.
Figure 1: Nominal and real per capita spending growth 2004-2013 Source: IMS Health, National Sales Perspectives, Jan 2014; U.S. Census Bureau Jul 2013; Economist Intelligence Unit Nov 2013. | Figure 2: Nominal and per capita dispensed prescription growth 2004-13 Source: IMS Health, NPA, Jan 2014; U.S. Census Bureau. |
· Specialty medicines and generics growth better than traditional medicines and brands: While spending on branded and unbranded generics accounted for just 29% of total spending, the growth rate of 3.1% and 9% YoY outpaced branded medicines growth of just 1.9% in 2013. The report indicated that unbranded generic spending rose 9% aided by the significant volumes of patent expiries in 2011-2012. Other key trends in spending that support growth for Indian companies focus on complex generic a) the 9% growth in Specialty medications and b) the 7.3% growth in injectables in 2013 (vs. -1.3% in orals which accounts for 52% of total spending).
· Prescription increase was driven by declining cost in certain therapy areas: IMS highlighted that the ACA provisions ensuring a zero out-of-pocket cost for preventive tests and treatments and for contraceptives helped increase volumes. In 2013, total prescriptions growth for nervous system disorders increased by 5.9% YoY, hormonal contraceptives was up 4.6%, anti-hypertensives and mental health was also 1+% higher YoY. IMS indicated that 24Mn more prescriptions were filled for oral contraceptives with no co-pay vs. 2012 and share of women with no out-of-pocket cost for oral contraceptives increased to 56% (from 14% one year ago). OCs has been a key focus area for Indian players like Lupin, Glenmark and Sun Pharma over the last few years.
Figure 3: 2013 medicines spending, and growth segmentation comparison
Source: IMS Health, National Sales Perspectives, Jan 2014.
· Generic penetration in the US continues to increase. Generics reached 86% of dispensed prescriptions in 2013 (including 6% branded generics), and spending in this segment grew by $5.8bn (including both volume and price effects). The generic penetration has increased steadily and is up from 84% in 2012 and just 57% in 2004. IMS indicated that the next 5 years include patent expiries for an additional 5-6% of prescriptions but further genericization of drug usage is not expected to be beyond 91-92%. While there is still some upside to generic penetration, we believe that the opportunity for Indian companies is from complex and specialty medicines.
Figure 4: Percent share of prescriptions in the US
Source: IMS Health, National Prescription Audit, Jan 2014.
· Other trends: The top 10 therapy areas accounted for 55+% of spending on medicines in 2013, led by oncology (increasing 9.2% YoY in 2013). Among the largest therapies, diabetes, autoimmune diseases and multiple sclerosis witnessed spending growth of over 10% aided by recent innovations. In 2013, ~69% of the $10.9bn in new drug spend was from oncology (~$2.1bn), multiple sclerosis ($1.8bn) and other specialty drugs. Mental health, respiratory, lipid regulators and anti-hypertensives declined by over 5% in 2013 primarily due to patent expiries and lack of newer medicines in these therapies.
Figure 4: New brand spending US$Bn
Source: IMS Health, National Sales Perspectives, Jan 2014.
Figure 4: Spending in leading therapy areas
Source: IMS Health, National Sales Perspectives, Jan 2014.
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