Deloitte report: global life science development trend in 2018

Source: Sina medicine 2018-03-19 health life sciences refers to the application of biology and technology to promote health care, including pharmacy, medical technology, genomics, diagnostics, digital medicine, etc There are various products in this sector, including drugs, medical technology, diagnosis and digital tools At present, the largest part of life science market is still pharmaceutical industry Recently, Deloitte, one of the world's four leading accounting firms, released the report "global life science outlook 2018" The report points out that with the arrival of the fourth industrial revolution, the life science industry will continue to embark on a revolutionary technological journey All kinds of disruptive new technologies are creating a revolutionary opportunity for the development of life science, and scientific achievements are growing at a record speed At present, life science industry companies are preparing for the future by embracing these new technologies (including 3D printing, artificial intelligence, cloud computing, big data, Internet of things, blockchain, continuous manufacturing technology, robot process automation, digital medicine, gene therapy, car-t, etc.) and building a patient-centered culture Strategic alliances and new business models will also contribute to the growth of the industry as a whole But growth is accompanied by some uncertainty, including pricing pressures, value based contracts, geopolitical climate and policy changes However, life science industry companies are actively taking measures to meet these challenges The report analyzes the economic development trend of the global life science industry and discusses how life science companies should embrace new technologies, grow and win future development The following is Deloitte's analysis of the economic development trend of the global life science industry 1 Global prescription drug sales will grow rapidly, reaching US $1060 billion in 2022 After a slow recovery, global prescription drug sales are expected to grow rapidly at a CAGR of 6.5%, reaching US $1060 billion by 2022 In contrast, CAGR was only 2.2% in 2012-2016, compared with 8.6% in 2004-2008 However, this strong growth momentum may be moderated by pricing pressure and the second wave of patent cliff Most research-based pharmaceutical companies will continue to see their revenues and profits rise In the next few years, with the exception of Venezuela, prescription drug sales in each market are expected to grow The recovery in consumption will be driven by further consolidation of the generic market and increased budgets for high priced pharmaceutical products, including orphan drugs There are still companies struggling with the patent cliff, with $1940 billion in prescription drug sales expected to be affected by 2022 The industry as a whole will continue to rely on the growth of emerging markets Eight of the top 20 pharmaceutical markets in the world benefit from a growing middle class, and China is expected to enter the top three in the near future However, government led cuts in health care spending may constrain market growth 2 Orphan drug market will double in the next five years In the next five years, orphan drug market is expected to double, reaching US $209 billion in 2022 It is expected that these high-cost, specialty drugs have been and will continue to be subject to pricing review by policy makers In 2016, among the top 100 drugs sold in the United States, the average treatment cost of orphan drugs was $14044300 per patient per year, while that of non orphan drugs was only $27756 According to the FDA, 75 orphan drugs were approved in 2017, compared with 27 in 2016 and 56 in 2015 In the United States, the average sales of the top 50 orphan drugs sold in 2016 was about $637 million Although only about 600 orphan drugs were approved, up to 7000 diseases were defined as rare diseases Significant scientific progress will lead to more rare diseases being found, more orphan drugs seeking regulatory approval and greater pricing pressure The passage of the new US tax law effectively reduced the burden of orphan drug research and development of biopharmaceutical companies by 40% However, this reduction is unlikely to change the strategy of life science companies Orphan drug market is a strategic market to solve the unmet medical needs The key benefits are not only tax credit, but also other important aspects, such as 7-year market monopoly, faster FDA review and fee exemption, etc 3 Biologics will account for more than 1 / 4 of the global pharmaceutical market In the past few years, the number of bio generic drugs under research in China has increased significantly In 2013, the global sales volume of biological agents was US $150 billion, but by 2020, this figure is expected to reach US $290 billion, accounting for more than a quarter of the global drug market, reaching 27% As a result, the best-selling biological products in the industry will face the loss of income brought by the impact of bio generic drugs The lack of payment capacity and drug accessibility for biological agents will strongly promote the growth of bio generic drug market, especially in emerging countries and regions In the European Union, countries are actively seeking to save medical costs through bio generic drugs, although the market share of bio generic drugs is still low In terms of price, generally speaking, bio generic drugs are about 30% lower than brand bio preparations In the U.S market, the biggest impact on biosimilars sales is that 25-30 biosimilars are expected to be on the market in the next two years by 2020 However, due to the lack of a clear regulatory approach, there is also a headwind in the United States The Asia Pacific region has the largest number of biological generic drugs By country, China ranks first with 269 China has the potential to become the frontier market of bio generic drugs The growth of biosimilars will effectively improve the use of biological agents, and at the same time promote the whole industry into an innovation period Progress in manufacturing technology is also being used in the production of bio generics In the next few years, biosimilars production is expected to account for 10% of the global bio manufacturing capacity of some companies 4 The share of generic market capacity will continue to be more than 80% in 2022, and generic sales are expected to account for 29.2% of total global pharmaceutical sales, accounting for about 28% in 2017 Emerging markets and the United States will continue to cut medical spending, which will strongly promote the growth of demand for generic drugs In terms of market capacity, at present, generic drugs account for more than 80% of global drug capacity, which is expected to continue to grow as more drug patents expire Many blockbuster drugs are facing patent cliff, a considerable number of which are biological agents 5 Oncology will still be the key treatment field in terms of sales, and oncology will continue to lead the treatment field By 2022, it is expected to account for 17.5% of the sales of prescription drugs and OTC, exceeding the sum of the next three treatment fields In addition to oncology, the largest CAGR of the 15 treatment categories will come from immunosuppressants, skin medications, and anticoagulants 6 Individualized drugs will grow at twice the rate of the whole industry in the next few years The global individualized medicine market is expected to grow at 11.8% CAGR, and reach 240 billion US dollars in 2022, with the growth rate almost more than double the 5.2% CAGR of the whole healthcare sector This growth will be driven by advances in technology and targeted therapies that are more effective and provide more value Individualized care will focus on prevention and early intervention, rather than treatment of advanced diseases More than 40% of the compounds and 70% of the oncology compounds have the potential to become individualized drugs Real world data and artificial intelligence (AI) technologies are accelerating the development of more effective molecules and compounds 7 Major new drug innovation will come more from small companies in the next five years, and global pharmaceutical and biotechnology research and development (R & D) is expected to grow by 2.4% CAGR, slightly lower than the 2.5% in 2008-2016 In 2022, total R & D spending is expected to reach $181 billion, compared with $156.7 billion in 2016 More and more major new drug innovations will come from small niche companies that focus on discovering new drugs, and the proportion of new drugs coming into the market from large pharmaceutical companies will be less than a quarter The industry is expected to continue to face challenges in R & D revenue The cost of bringing an asset to market reached a record level in 2017, and many large pharmaceutical companies will continue to face generic competition With the increase of drug approval quantity and the acceleration of approval speed, it will be a new normal for R & D to trigger pricing competition, which also means less time for pharmaceutical companies to obtain substantive profits In 2018, the U.S FDA promised to further speed up the approval, but the risk of speeding up the approval could eventually become a disaster for drugs in the pharmaceutical market 8 IVD will remain the largest segment in the field of medical technology in the next few years Global medical device sales are expected to grow by 5.1% CAGR, reaching US $521.9 billion by 2022 IVD is expected to remain the largest medical technology segment, with annual sales of $70 billion by 2022 Second is Cardiology, with sales expected to reach $62 billion by 2022, followed by $48 billion for diagnostic imaging and $44 billion for orthopedics In 2022, the top 10 companies in the world are expected to occupy 37% of the medical technology market Global spending on medical technology R & D is expected to grow by 3.7% CAGR, from $27 billion in 2017 to $33.5 billion in 2022 The share of R & D investment in sales is expected to decline from 6.9% in 2016 to 6.4% in 2022 In the recent US tax reform, the abolition of the medical device consumption tax is not included The medical technology industry believes that this tax has a significant negative impact on medical innovation However, the industry will continue to introduce alternative legislative measures 9 Non traditional, technology-oriented adjacency will be an important direction of life science M & a strategy In 2017, the transaction value of life science further declined compared with 2016, because of the uncertainty of global economy and politics In 2017, the large-scale transactions tend to focus on the traditional way of acquisition, that is, the acquiree is within the core competitiveness of the acquirer According to Thomson Reuters, the biggest deal by the third quarter of 2017 was the $24.2 billion acquisition of Cr bard by BD in April The biotechnology industry is Geely's $11.1 billion acquisition of kit, while the pharmaceutical industry is Thermo Fisher's $7.2 billion acquisition of patheon NV In 2018, the volume and price of life science transactions are expected to rise, and the number of large transactions will also increase, due to the following reasons: (1) the adoption of the US tax reform, the progress of brexit and the maturity of relevant policies on transactions from outside China have eliminated some uncertainties in the 2017 life science M & a system The US tax reform provides some incentives for the repatriation of overseas funds, which will stimulate the added value of M & A transactions (2) The capital market remains strong: in 2016, the bleak M & a trading environment across industries inhibited the need to create value through M & A transactions (3) All links of life science are still fragmented, and additional value can be obtained through further industry integration In 2018,