The US pharmaceutical market is the largest in the world and, accordingly, it has the world's highest per capita drug spending - currently US$1,031. This figure is, however, forecast to fall to just US$950 by 2013, changing at a compound annual growth rate (CAGR) of -1.62%. The total market, valued at US$313.6bn in 2008, will also experience a contraction (of CAGR -0.66%) to 2013, when it will be worth around US$303.4bn at consumer prices. While medicines are considered to be essential items, and are widely used across the country, certain factors will take their toll on the values over the coming years: the economic recession, falling prescription numbers, the patent cliff, and the encouragement of the use of generics. The pharmaceutical landscape in the US is expected to become, on the one hand, more challenging for research-based companies over the coming years, following the inauguration of the new administration led by President Barack Obama. While his plans include a programme for bringing some 50mn currently uninsured people into the healthcare system, high medicines prices may be targeted. A more damaging development is the debated bill that would prohibit patent-holders to use authorised generics to combat competition. On the other hand, the January 2009 reversal of the federal funding restrictions placed on stem cell research and therapies - which were in place in the US since 2001 - indicates the new administration's willingness to encourage innovation. In terms of major industry news, the leading global drugmaker, US-based Pfizer, is to acquire its compatriot Wyeth. This will be the largest single consiladative deal the pharmaceutical industry since 2000, and also one of the most controversial, given large-scale job cuts in the current economic climate. The mega-merger, indicative of the more difficult operating environment that is occurring in the run-up to the 2011 patent cliff (when many patents on drugs are set to expire), will see two of the top 10 pharmaceutical companies by sales combine to create 'the world's premier biopharmaceutical company'. BMI considers the main goals of the merger to be therapeutic and product platform diversification, given Wyeth's considerable biologics portfolio, thus reducing reliance on individual products. In the meantime, approximately one-third of the small biotech pharmaceutical companies in the US are expected to discontinue their operations in 2009 due to the slowdown in the market, as forecast by Esperion Therapeutics' Chief Executive Officer (CEO). Indeed, we are forecasting a 2% contraction in the US economy in 2009, as fixed investment and consumer activity retrench heavily. The 2010 recovery will be modest, with growth of just 0.8%, as deflation/disinflation for both prices and assets remains our core scenario.The one driver of US growth over the past few quarters has been net exports, driven by a reduction in imports and by the fact that the weak dollar has been improving export competitiveness.
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