Pricing Dynamics in 2019
The United States continue to hold advanced positions due to increased investment in clinical research and development of a large number of drugs in the fight against rare and serious diseases. It is noteworthy, how much companies spend on research, since these data are helpful in finding out which company focuses on the issue of internal growth. According to the data of the monthly retail audit of the Canadian pharmaceutical market conducted in the first half of 2019, 5 billion packages of medicines worth $300 billion were sold through the retail segment. The capacity of the drug market increased by 15% compared to the same period in 2018.
The weighted average price of one package of drugs increased by 6%. Cheap drugs are being removed from pharmacy assortment and consumers are forced to switch to more expensive drugs. Moreover, the price factor is less significant. In 2018, in the first half of the year, prices rose by 5%. The structure has changed in favor of drugs of the high price segment relative to February-July last year. Positive dynamics of sales was observed only in the category “over $8”, due to which the share of expensive drugs increased by 23% in money and by 2% in natural terms. By contrast, some public health initiatives were undertaken to counteract this extreme and uncontrolled soaring of the drug costs. In summer 2019 – and extended for the first autumn month, seeing the huge popularity of the deals – Canadian Pharmacy cohealthop.org released a number of special offers for most demanded healthcare items: cohealthop.org/seasonal-summer-offers-2019
Generic companies have been active in release and registration of new drugs, which exacerbates competition at the American pharmaceutical market. Drugs with the following therapeutic categories prevail in the generic market: agents that affect respiratory and central nervous systems, antitumor drugs and drugs that affect the digestive system and metabolism. Cordially-vascular drugs occupy about 20% of the US generic market, antibiotics – 14,5 %, and slightly less analgesics – 13%. One of the main risks for large U.S. pharmaceutical companies today is the expiration of a patent protection for original blockbusters. These drugs form a noticeable share in total sales of pharmaceutical giants, and this phenomenon has a great influence on the overall results of their business activities.
Tough Market and Prospects for 2020
Pharmaceutical companies trading in the public sector face greater barriers than firms in other industries — their patents are short-lived, their approval process is lengthy, and most of their projects are disadvantageous. The fact that the top three drugs were brought to market by large pharmaceutical companies should not be surprising. These companies had reliable pipelines, a good track record of transferring pipeline products to the market and money for PR and mass production. Small pharmaceutical companies stumble upon profitable drugs, but they are often bought back by large companies because they lack the resources to bring these drugs to the market.
From the investment point of view, this situation provokes speculative games of small firms, but even large firms are far from stable ratings. Large firms may suddenly lose their drug patents, which make up a significant portion of their profits, as Eli Lilly and Prozac did. That is why the pipeline is of great importance. Even with a large, profitable product such as Prozac or Viagra, the pharmaceutical company must have other products that are suitable to protect against the expiration of their patents and hidden patent trolls.
It is not always easy to predict the future of the drug. Studying social needs and desires can help determine what the next big thing will be in the pharmaceutical market. As with Prozac, all kinds of incidents can affect the area. With such an unpredictable and often unsustainable foundation, it is thorough research and understanding that makes the drug market financially viable.
Expenses on Promotion and Marketing
A significant part of the increase in promotional costs is attributable to sales professionals or sales force employees. However, many of the industry’s largest markets are currently oversaturated by sales representatives whose sales methods are becoming increasingly ineffective.
So, in the period 2005-2019 the number of sales representatives in the USA almost doubled to 80 thousand people, although the number of practicing doctors increased by only 28%. Thus, various U.S. states have accepted laws requiring pharmaceutical companies to disclose all gifts or benefits to healthcare providers in excess of $25.
In addition to the work of medical representatives, another big weapon in the marketing artillery of pharmaceutical companies is direct advertising to consumers. In the United States, companies are currently allowed to market their medicines directly to consumers. Pharma’s DTC advertising costs are about $6 billion representing just 15% of the total marketing budget. Thus, aggressive marketing, whether aimed at doctors or patients, is becoming increasingly ineffective as a means of stimulating demand. Big Pharma responded to this challenge with various measures to reduce costs, including a reduction in the number of sales force employees in the forthcoming 2020.
By 2020, the role of the traditional sales representative will become largely obsolete. The industry, on the contrary, will have a much greater need for people with experience in creating brands, managing a network of external alliances, negotiating with governments and insurers, and establishing communication with mid-level specialists and patients. This will require retraining of existing staff and changing the core values of pharmaceutical companies, taking into account the patient and his needs. However, if Pharma can overcome new challenges, it will be possible to achieve a significant reduction in marketing and sales costs. Counseling health care payers during development will put them in a much better position. This will ensure that the billions of dollars invested in R&D (
en.wikipedia.org/wiki/Research_and_development) are wisely spent. Creating packages of medical services for the treatment of specific diseases (personalized approach) will guarantee the value of medicines, as well as provide new sources of income and greater loyalty from patients.
Top 5 of Most Demanded Drugs in the U.S. and Canada
There are 5 major players that take impact on the whole financial situation on the U.S. pharmaceutical market. For the period 2015-2019, ten U.S. pharmaceutical companies have increased sales of their medicines in the range of 20-100%. So, the leader among American drugs in the U.S. and Canadian market is Pfizer, Viagra. Sales of this drug increased over the analyzed period from $35 to $48 million, by 36%. Viagra was first used as a treatment for angina pectoris and hypertension, but it did not have much success in combating these conditions. Fortunately, the drug caused an unintended biochemical reaction on male sexual abilities. In 2012, the Pfizer patent for Viagra expired in all countries except the United States and Canada. This meant that other companies were able to produce generics using the same active substance. In the United States and Canada, a patent is valid until 2020. But the corporation still had to make concessions and allow Mylan and Teva to release the Viagra generics from 2017. The figure of Pfizer’s revenue is steadily falling and bearing a discouraging forecast for 2020.
Along with Viagra, the top five includes 2 more Pfizer drugs: Diflucan and Norvasc, occupying 2 and 3 places, respectively. Bristol-Myers Squibb’s Monopril takes the fourth position: over the analyzed period, its sales decreased from $24 to 23 million, by 6,8 %. This situation indicates the focus of companies on any segment of pharmaceutical market in order to obtain maximum profits from the sale of one or two drugs. Thus, the role of American pharmaceutical companies on the market is fixed by the introduction of several drugs that occupy a strong market position and create fierce competition. Targeted U.S. company policies provide absolute leadership and perfect opportunities for 2020.
Prozac was created by Eli Lilly. The drug was used as an anti-obesity medicine and remedy for high blood pressure before the company came across its psychiatric use. Prozac was sold as a new drug for treating general depression by controlling the level of serotonin in the patient’s brain. This was the right time for Prozac, as the only drug for depression, Valium, was addictive and not completely free from unpleasant side effects.Despite competition from cheaper generic drugs, Prozac remains one of the most popular antidepressants and is used by millions around the world. According to the World Health Organization, out of 875 million Europeans, 100 million are in a deep level of depression. By 2020, depression will become a leader in global disease statistics, leaving behind infectious and cardiovascular diseases. And now, depression is the first most popular reason for going on sick leave in Sweden and the second in the USA.