The size of the global market for pharmaceuticals is expected to grow nearly $300 billion over the next five years, reaching $1.1 trillion in 2014, according to the pharmaceutical market research firm IMS Health. Overall, IMS says the drug sales will grow at a compounded annual rate of 5 to 8 percent. Growth in emerging countries will help offset the large number of leading products losing patent protection during this period.

Over the next five years, products with sales of more than $142 billion are expected to face generic competition in major developed markets. Collectively, the impact of patients shifting to lower-cost generics in major therapy areas such as cholesterol regulators, antipsychotics, and anti-ulcerants will reduce total drug spending by about $80 to $100 billion worldwide through 2014. This impact particularly will be felt in the United States, where nearly two-thirds of the total value of patent expiries will occur. Patent expiries in the United States will peak in 2011 and 2012 when six of today’s ten largest products are expected to face generic competition.

As the pharmaceutical industry’s research and development programs adjust to the broad availability of low-cost generic options in many chronic therapy areas, IMS says higher growth will occur in those therapy areas where there is significant unmet clinical need, high-cost burden of disease, and innovative science that can bring new treatment options to patients. In the areas of oncology, diabetes, multiple sclerosis and HIV, annual growth is expected to exceed 10 percent through 2014 as new drugs are brought to market, patient access is expanded and funding is redirected from other areas where lower-cost generics will be available.

“Patient demand for pharmaceuticals will remain robust, despite the ongoing effects of the economic downturn being felt in many parts of the world,” says Murray Aitken, senior vice president of Healthcare Insight for IMS. “In developed markets with publicly funded healthcare plans, pressure by payers to curb drug spending growth will only intensify, but that will be more than offset by the ongoing, rapid expansion of demand in the pharmerging markets.”

Global pharmaceutical sales in 2009 grew to $837 billion, a 7 percent increase. That compared to a 4.8 percent growth rate in 2008. IMS forecast growth for 2010 to be between 4 to 6 percent. Aitken says net growth over the next five years is expected to be strong — even as the industry faces the peak years of patent expirations for innovative drugs introduced 10 to 15 years ago and subsequent entry of lower-cost generic alternatives.

The geographic balance of the pharmaceutical market continues to shift toward emerging countries. Emerging markets are expected to grow at a 14 to 17 percent pace through 2014, while major developed markets will grow 3 to 6 percent. As a result, the aggregate growth through 2014 from emerging markets will be similar to the growth experienced in developed markets — about $120 - $140 billion. This compares to aggregate growth over the past five years of $69 billion in emerging markets and $126 billion in developed markets.

The United States will remain the single largest market, with 3 to 6 percent growth expected annually in the next five years and reaching $360 to $390 billion in 2014, up from $300 billion in 2009.

Publicly funded health systems are under increased pressure to reduce growth in drug budgets following the global economic downturn. Countries including Turkey, Spain, Germany and France already have announced plans to apply across-the-board restrictions on access or reductions in reimbursements to reduce drug spending growth. Governments in other countries seeking to restore fiscal balance may take similar actions, or shift more costs to patients.

“The expected global economic recovery removes an element of uncertainty for the industry over the next five years, although the way payers address lingering budget deficits will remain an issue in many markets,” says Aitken. “Health system reforms, such as those to be implemented in the U.S., can spur fundamental change in the market — but the full impact may not be felt until the latter half of this decade.”