After enduring the brutal patent cliff that resulted in worldwide drug sales actually declining in 2012, the prescription drug industry is on the verge of a five-year-plus period of projected steady mid-single digit revenue growth and, potentially, even higher earnings growth.
Although patent expirations have not disappeared as a sales headwind, the products that will experience patent expirations over the next few years are, for the most part, biologics. Unlike the small molecules that lost patent protection in past years, biologics will likely face a smaller number of generic competitors, with correspondingly less extreme discount pricing.
Another important positive element is the recent wave of restructuring initiatives, sometimes linked to mergers and acquisitions activities. These efforts should provide ample opportunity for cost cutting, which should result in profits growing faster than sales.
Worldwide Total Prescription Drug Sales 2006-2020
Source: EvaluatePharma® (1 June 2014)
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