Healthy demand in the East

According to fresh data from research body IMS Health, worldwide sales rose seven per cent in 2004 to some 285 billion, of which nearly 45 per cent came from North America. The year before, sales grew by ten per cent.

The weakening growth reflects the continuing woes of an industry beset by the loss of patent protection on some of its biggest-selling drugs, a dearth of new products, pricing pressures and slowing earnings growth.

While 82 drugs had annual sales of more than $1bn (519 million) last year, 17 more than the year before, 11 came from biotechnology companies and 12 were drugs treating specialist diseases such as cancer, schizophrenia and HIV.

China was found to be the fastest growing market, expanding 28 per cent to almost 5bn, boosted by a booming economy and greater wealth.

Murray Aitken, senior vice- president of corporate strategy at IMS, said: "Any pharmaceutical company that doesn’t have a ten-year strategy for China is well behind and can’t afford to miss this important new opportunity for growth.

"It has price controls, but it’s also a country that has very large unmet medical needs and it’s becoming wealthier over time."

He added that China would continue to be the fastest growing market for at least the next four years, with a compound annual growth rate of 13-16 per cent through to 2008.

Commenting on general trends within the industry, Mr Aitken said: "Historically, the story has been that to be a blockbuster it had to be a primary care drug or one treating a chronic condition.

"This is no longer the case. A specialist area doesn’t have to mean small sales."

Global sales increases over the next four years are set to remain little changed on 2004 at between six and nine per cent, Mr Aitken noted, with demand from an ageing population offsetting price cuts and a potential lengthening of the drug approval process following Merck’s withdrawal of its painkiller Vioxx.

Cholesterol and triglyceride reducers remained the top selling drugs in the world, with sales of around 15.7bn last year, up nearly 12 per cent over 2003.

Pfizer’s cholesterol drug Lipitor remained the world’s biggest-selling, with sales of some 6.2bn, IMS noted. Among the fastest growing drug classes, cancer drug sales rose nearly 17 per cent to 12.3bn while sales of a class of hypertension drugs known as Angiotensin-II inhibitors lifted 22 per cent to some 6.2bn.

Meanwhile, sales of anti- epileptic drugs rose 17.7 per cent to 5.9bn.

Merck’s cholesterol drug Zocor had the second highest sales in the world, while Sanofi-Aventis and Bristol-Myers Squibb’s anti- clotting drug Plavix came in third.

Mr Aitken said: "I think efforts by governments around the world to slow spending on pharmaceuticals are greatly constraining growth."

Many countries are encouraging the use of generic treatments over more expensive branded drugs.

Although generics only accounted for eight per cent of drug sales in North American and Western Europe - the world’s two biggest markets - they accounted for about 30 per cent of volume.

Yet so-called parallel trading, or legalised drug re-importation, appears to be slowing in Europe.

Mr Aitken argued that this was largely due to drug manufacturers getting better at managing their supply chains.

He pointed out that brand-name drug sales were growing in China, despite the country being home to a burgeoning generics sector.

One market that appears to be flattening is Japan. Sales of drugs there grew by a distinctly unhealthy two per cent in 2004 to 30bn.

According to Mr Aitken, tight price controls generally mean Japanese sales grow by one to four per cent each year.

IMS is one of the world’s leading suppliers of market research and business analysis to the global drugs industry. It has information services in more than 100 countries, including the UK.