The rising cost of raw materials, stringent regulatory requirements and increasingly competitive environment all are rapidly eroding the profit margins of many antibiotic manufacturers. BCC Research reveals in its new report that these challenges, and the growing problem of antibiotic resistance, have dramatically shifted the business models of some of the industry’s leading pharmaceutical companies.
The global systemic antibiotics market should reach nearly $44.7 billion in 2020 from nearly $40.6 billion in 2015 at a compound annual growth rate (CAGR) of 2.0% from 2015 to 2020. By market class, beta-lactams should total more than $22 billion by 2020, up from $20.6 billion in 2015, with a five-year CAGR of 1.3%. The other antibiotic classes market should total $8.3 billion and $10.6 billion in 2015 and 2020, respectively, demonstrating a five-year CAGR of 5%.
The global aging population, rise in infectious diseases and resistant bacteria, increased prevalence of hospital-acquired infections and new drugs launched are key market drivers. Most growth is expected in the two Asian giants; China and India. Economic conditions and cost–containment issues have compelled North American and European antibiotic manufacturers to explore new regions such as India, China and Brazil for growth opportunities.
Development of novel antibiotics to combat multidrug-resistant strains and targeting non-multiplying bacteria also should play a role in the market’s growth during the forecast period. New drug launches (two glycopeptides and three cephalosporins in the U.S. market in 2014 and 2015, respectively) are key market drivers. Additionally, the positive change in the regulatory framework, such as the priority trials and the increasing acceptance of inferiority trials, are encouraging pharmaceutical manufacturers to invest in new antibiotics. In turn, this should increase sales volume, as well.
Overall, the global healthcare scenario is undergoing a transition due to rising concerns over healthcare costs. The traditional link between sales volumes and price determines the return on investment for a drug. But in the case of antibiotics, this situation is different owing to resistance; maximizing sales volumes of antibiotics is not in the interest of global public health. Delinkage models remove the link between the funding of antibiotic R&D and sales volumes.
“The existing business model is to recover pharmaceutical R&D investments through sales revenues above marginal cost during a period of patent–based exclusivity. There are some inherent issues with the existing business model in the antibiotics business,” explains BCC Research analyst Neha Maliwal. “It encourages firms to market their drugs aggressively during the exclusivity period and, in particular, when patent expiration is approaching, driving resistance through overuse and misuse. After patent expiration, the current model encourages multiple generic entries and price competition, which has also been linked to resistance. Also, another factor affecting the resistance is the presence of generics in the market. As generic antibiotics retain clinical effectiveness, companies struggle to gain significant pricing premiums for new drugs.“
Antibiotics: Technologies and Global Markets (PHM025D) analyzes the industry by both human application and veterinary application, and by related technologies for antibiotics. The report examines trends, pricing considerations, R&D, government regulations, and competitive technologies. Analyses of global market drivers and trends, with data from 2014, 2015, and projections of CAGRs through 2020 also are provided.
