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2020 will long be known as the year everything was turned upside down. It remains to be seen how our society will bounce back from the ravages of the coronavirus, but one thing that is for sure is that key industries will never be the same again. One such industry is the pharma industry.
In an attempt to keep track of this rapidly evolving field, we’ve prepared a list of eight pharmaceutical industry statistics you need to know about.
The global pharmaceuticals market grew by $100bn between 2017 and 2018, hitting $1.2tn
While this figure covers the whole world, not just the United States, but it does demonstrate the expansion of the market as a whole. As the world becomes increasingly globalized, even in the wake of a crisis like the Covid-19 pandemic, domestic pharmaceutical companies will look to tap into opportunities on the world stage.
In the US, spending grew to $485bn, an increase of 5.2% from 2017 to 2018
Back in the US, however, spending has also grown. This makes for a fertile environment for investment, and contributes to a landscape which is ripe for innovation and progress. We can expect this year’s spending figures to be even greater, following the scramble to develop treatments and vaccines for the coronavirus.
By 2023, pharmaceutical industry spending will hit between $625bn and $655bn in the US
Even before we factor in the increased spending from this year, pharma industry spending is projected to soar over the first few years of the new decade. It is difficult to say exactly how much the increase will be, but initial projections place the total spending figure somewhere between $625bn and $655bn in the US alone. We can expect that figure to be inflated somewhat in the aftermath of the virus.
Despite this increase, growth is expected to slow
These figures are impressive, but it appears that growth in real terms will slow for the US pharmaceutical market. Businesses are spending large amounts of capital to stay competitive. They are not achieving the explosive levels of growth you might expect from such spending. This hints at a need for careful and considered innovation, as pharma companies optimize their returns on investment, as well as the necessity of careful handling of materials to reduce wastage.
72% of active pharmaceutical ingredients (APIs) are now manufactured outside of the US
The United States does not have direct control over its pharmaceutical supply chain. This is because almost three quarters of the active ingredients used in producing pharmaceuticals are manufactured overseas. In response, businesses need to invest carefully in the testing and production solutions to protect these precious commodities during the manufacture of new drugs.
This is despite the creation of 400,000 new jobs in the domestic manufacturing sector
The creation of jobs in the domestic manufacturing sector has seemingly passed the pharma industry by. While American manufacturing has achieved something of a resurgence, the manufacture of APIs still, by and large, takes place outside of the US. This makes it difficult for pharma producers to control the prices they offer to customers.
Coronavirus accelerates research, with the fourth largest vaccine research grant in US history awarded to AstraZeneca
Of course, the arrival of Covid-19 has pushed research, development, and investment into overdrive. There are currently at least twelve companies pursuing a coronavirus vaccine, and many of these companies are being supported by large government grants that aid research. The grant received by AstraZeneca is the fourth largest of its type in American history.
Pharmaceutical stock indexes underperformed against the broader market throughout 2019
Increased investment and a new focus on research have come off the back of poor stock performance across 2019. The SPDR S&P Pharmaceuticals ETF (XPH) posted a return of -12.7% in 2019, behind most of the other major indexes on the stock market.
2020 is certainly an unprecedented year, and it remains to be seen what kind of impact Covid-19 will have on the industry. However, it looks certain that the pharma industry will be spearheading the fight against the virus.