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Institute Report
Global Medicine Spending and Usage Trends: Outlook to 2025
Apr 28, 2021
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About the Report

The future level of global spending on medicines has implications for healthcare systems and policymakers across developed and emerging economies, and these issues are even more important in light of the ongoing global COVID-19 pandemic. Stakeholders share common goals of improving health outcomes while controlling costs and expanding access to medicines, however these tasks have been made more challenging by uncertainties brought on by the pandemic. Past spending growth typically offers some clues on expected future growth and, broadly, that will still be true despite the unprecedented dynamics at play. This report examines trends in medicine spending along with factors influencing growth, including patent expiries, launches of new medicines, and changes in demand and use, particularly in pharmerging and lower income countries.

Report Summary

The global medicine market — using invoice price levels — is expected to grow at 3–6% CAGR through 2025, reaching about $1.6 trillion in total market size in 2025. This excludes spending on COVID-19 vaccines, where total cumulative spending through 2025 is projected to be $157 billion. In this report, we quantify the impact of dynamics influencing growth in the use of medicines and examine current levels of spending and use in 2020, globally, and for specific therapy areas and countries. 

In developed countries, the adoption of new treatments, offset by patent lifecycles and competition from generics and biosimilars, are expected to continue as the main factors influencing medicine spending and growth. New brands in the region are projected to continue a historically high period of spending on novel medicines through 2025, similar in absolute spending to the past five years. 

In pharmerging countries, dramatic increases in healthcare access were the largest driver of changes in the use of medicines historically, but the trend is slowing and will result in volume declines across many markets. Growth in the region will be led by China, which is expected to accelerate, post-COVID, driven by greater uptake and use of new original medicines.

Key Findings

Global market growth rates will return to pre-pandemic projections by 2025 despite year-to-year fluctuations 

Exhibit 9: Comparison of Current Outlook to Pre-COVID-19 Outlook

  • While the short-term impact from COVID-19 in 2020 and 2021 has been significant, the long-term impact on growth trends is more muted. 
  • Including estimates of higher spending growth from COVID-19 vaccines and lower spending from existing treatments due to disruptions from the pandemic, the five-year CAGR to 2025 is expected to be 4.6%, compared to 4.5% if the pandemic had not taken place.
  • A range of changes in the use of medicines will be prompted by COVID-19, with demand for new vaccines and therapeutics as well as shifts in demand for existing therapies and changes in patient behaviors.

Slowing growth in the use of medicines in pharmerging markets will drive global growth to less than 1% CAGR over the next 5 years

Exhibit 10: Historical and Projected Use of Medicine by Segment, 2010-2025, Defined Daily Doses (DDD) in Billions

  • The global use of medicines has been growing for the past decade, driven by access expansions in pharmerging markets.
  • Lower-income countries have dramatically lower access to medicine. Access has been declining for the past five years and is projected to continue, potentially putting prior health improvements at risk.

The global medicine market — using invoice price levels — is expected to grow at 3–6% CAGR through 2025, to about $1.6 trillion

Exhibit 17: Global Medicine Market Size and Growth 2010-2025, Cons US$Bn

  • Global medicine spending — the amount spent purchasing medicines from manufacturers before off-invoice discounts and rebates — is expected to reach $1.6 trillion by 2025, increasing at a rate of 3–6% per year.
  • Developed countries — those with upper middle or high incomes — are expected to grow from 2–5% through 2025, similar by comparison to the past five years.
  • Among these, the U.S. market, on a net price basis, is forecast to grow 0–3% CAGR over the next 5 years, down from 3% CAGR for the past 5 years, and off-invoice discounts and rebates result in spending that is estimated at 31% lower than invoice level in 2020 and projected to be 36% lower than invoice level in 2025.

Most therapy areas are forecast to grow more slowly over the next 5 years, with the exception of vaccines

Exhibit 33: Global Historic and Forecast Spending Growth for Top 20 Therapy Areas

  • Immunology, oncology and neurology represent the largest aggregate contributors to growth in the next five years, predominantly from a continued flow of new medicines that will be offset by losses of exclusivity.
  • The two leading global therapy areas — oncology and immunology — are forecast to grow 9–12% CAGR through 2025, lifted by significant increases in new treatments and medicine use. 
  • Oncology is projected to add 100 new treatments over five years, contributing to an increase in spending of more than $100 billion to a total of more than $260 billion in 2025. 
  • Neurology is expected to see many new therapies including novel migraine therapies, potential treatments for rare neurological diseases, and the potential for therapies for Alzheimer’s and Parkinson’s.
  • Overall growth in neurology is not significantly lower than in diabetes but the former has much lower discounts and rebates and the forecast embeds significant upside uncertainty related to Alzheimer’s therapies.

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