The pharmaceuticals sector is forecasted to grow faster than any other market in the next five years, according to the 2017 State of the Industry U.S. Packaging Machinery Report from PMMI, The Association for Packaging and Processing Technologies. The report analyzes 28 packaging machinery categories and describes trends and the outlook for packaging machinery shipments through 2022.
The U.S. packaging machinery market from 2015 to 2016 increased 4.8 percent, with a total market value of $9.8 billion, while the value of just U.S. domestic shipments estimated at $7.73 billion. Domestic shipments are forecasted to grow at a compound annual growth rate (CAGR) of 2.1 percent, reaching $8.8 billion in 2022.
Pharmaceuticals is predicted to grow at a CAGR of 3.6 percent, followed by food, which is forecast to grow at a CAGR of 2.3 percent from 2016 to 2022. As with other industries, general economic development drives pharmaceutical growth; as more people can afford access to drugs, this, in turn, drives growth in processing and packaging equipment for pharmaceuticals. The following are a few other reasons for a stable outlook in the market.
Stricter laws
One complexity of the pharmaceutical industry impacting growth is tight regulatory control.
In particular, legislation around traceability is affecting this sector, mainly driving fast growth in the labeling, coding and decorating machinery market.
In North America, the deadlines imposed for meeting the Drug Quality and Security Act (DQSA) of 2013 are starting to arrive. DQSA will now come into force in 2018 with later deadlines for re-packagers and wholesalers. The regulation requires a transaction document and serialization of all prescription products, enabling the electronic transfer of specified transaction information and history through the supply chain.
The China Food and Drug Administration (CFDA) has been gradually implementing its Electronic Drug Monitoring Network, which requires traceability of all drug products throughout the supply chain. Serial numbers are assigned centrally by the government, and all transactions, from manufacturing to dispensing, must be reported. The legislation required all drug manufacturers, both domestic and foreign, to use the network by Dec. 31, 2015.
The potential for changing healthcare legislation in the U.S. would have a definite, albeit uncertain, impact on the pharmaceuticals market. President Trump’s previous pledges to bring down domestic drug prices could lead to legislation allowing the U.S. Department of Health and Human Services to negotiate drug prices for Medicare. It’s highly controversial, and the details and impact of the proposed bill are unknown, which creates the potential for uncertainty in the U.S. drug industry.
Research and development
One of the main features of the pharmaceutical industry is the extent to which research and development play an important role. Billions of dollars are invested every year into the discovery and development of new medicines. It can often take over a decade to take a drug from inception to release, requiring a huge financial investment long before any return. As a consequence, the pharmaceutical industry has one of the highest research and development budgets as a percentage of sales compared to that of any industry. The relatively constant development and release of new medicines mean that growth of the sector is more susceptible to sudden changes than other sectors.
Longer life expectancy
As people become increasingly health conscious, and healthcare and medical advances continue, life expectancy will increase. In turn, this will lead to higher demand for pharmaceutical products and product innovation required for the growing number of older adults.
In the U.S., experts predict that the number of people aged 65 and older will more than double to 98 million from now to 2060. The increased elderly population will impact the pharmaceuticals packaging industry as there will be a greater focus on easy-to-open packaging. This trend is driving innovative packaging designs that maintain product quality and tamper prevention while balancing convenience needs for older or impaired consumers.
Patent cliff/new blockbusters
While the expiration of patents for some blockbuster drugs has had a significant impact on revenues of some leading pharmaceutical suppliers, competitors entering the market with low-cost alternatives is bolstering the number of products sold. More products equal an increase in the number of different packages. This trend is expected to continue through the forecast period as several other patents are due to expire in the next few years. PMMI’s report suggests an estimated $60 billion in drug sales from leading pharmaceutical companies will be at risk for competition.
With patents for a number of blockbuster drugs expiring, the introduction of a wide range of new medicines is stimulating growth in the industry.
For example, the U.S. Food and Drug Administration (FDA) approved 51 new drugs in 2015; the highest number in the past 66 years and second highest on record. Some of these examples are already multi-billion-dollar medicines, others are expected to reach such levels in the future.
In 2017, the pharmaceutical industry was as dynamic as ever. Demand for pharmaceuticals and pharmaceutical packaging is driven by economic growth, traceability legislation, investment into research and development, increased life expectancy and openings in the marker for new drugs. These factors will continue to shape the industry and spark innovation in 2018.
Filed Under: Drug Discovery
