Industry Trends Pharmaceuticals September 2024

Global pharma performance: Ageing populations, emerging markets demand and new products drive growth

• Looking ahead global pharmaceuticals output growth will remain robust, forecast to increase by 3% in 2024, 4% in 2025 and 3.6% in 2026.
• Regions with the largest annual growth rates are Asia Pacific and the Middle East.
• In the mid and long-term, producers of speciality products, medicines for chronic conditions and generic drugs will find opportunities for growth among ageing populations.
• Producers of medication for weight-loss are facing growth predictions of about USD 80 billion by 2030.

United States: Robust sales and low credit risk characterise the sector

• US pharmaceuticals output is expected to increase by 2.9% in 2024 and 2.5% in 2025. After a 17.3% surge in 2023, investments are forecast to increase by 15.8% this year.
• Ongoing demand will be driven by the ageing population. A surge in demand for weight-loss drugs will also benefit the US pharmaceuticals market in the coming years.
• Margins for branded pharmaceuticals are robust, leading to strong cash flow and credit profiles.
• However, drug pricing regulation could impact the industry, as the US government has taken steps to reduce the price of pharmaceuticals for consumers.

China: Government support drives innovation and better access to healthcare

• We expect Chinese pharmaceuticals production to grow by 7.7% in 2024 and by 6.1% in 2025.
• Pharmaceutical investments in China are forecast to increase by 7% annually in 2024 and 2025. The government strongly supports investment and R&D in order to shift away from producing generics and towards high quality drugs and biopharmaceutical innovations.
• Domestic demand will be boosted by a growing middle class that can afford high value-added drugs. At the same time the population is ageing, which will spur demand for drugs related to chronic illnesses.

India: Strong expansion of manufacturing base expected in the coming years

• After a 16.1% increase in 2023 we expect pharmaceuticals output to grow by 3.8% in 2024 and by 10.4% in 2025. Most businesses have strong balance sheets and good access to bank financing.
• The government has announced a large incentive scheme to boost local API production in order to compete with China. Together with a growing population and rising middle class, this could bolster India’s path to becoming one of the world’s largest pharmaceuticals manufacturers over the next decade.
• However, quality standard issues and incidents of alleged drug contamination remain downside risks.

European Union and UK: Ongoing growth and high M&A activities in the region

• After levelling off in 2024, we expect pharmaceuticals output and sales in the EU and the UK to grow by more than 3% annually in 2024 and 2025.
• Local production will benefit from announcements by both Novo-Nordisk and Eli Lilly to make large investments in several European countries in order to increase output of their weight-loss drugs.
• For the most part, financial indicators in the industry are strong, but some SMEs could face financing challenges. This is due to high R&D costs, competition from India and China, and difficulty accessing financing at competitive interest rates.
• M&A activity between larger pharmaceutical producers and smaller, often specialist pharmaceutical producers and biotech businesses is booming. We expect this dynamic trend to continue in the coming years.
• However, there are some concerns about the international competitiveness of the European pharmaceuticals sector in the longer term.

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