UK - How will the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are likely, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. However, the NHS is well equipped to deal with the financial shortage, as it has seen marked improvements in recent years.

Many pharmaceutical companies have announced job cuts worldwide in recent months, in an effort to reduce costs, and many staff based in the UK are likely to be affected. These companies include Eli Lilly, GlaxoSmithKline, AstraZeneca and Pfizer. Job cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

A number of key pharmaceutical and biologic products are going off patent in the coming years, which will strengthen the generics market. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Further reading - An in-depth analysis of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published January 2010)

USA - Eli Lilly to Cut 5,500 Jobs by 2011

Eli Lilly is cutting 5,500 jobs by the end of 2011 as part of restructuring, it was announced in September 2009.

The company, based in Indiana, expects the plans to cut annual costs by US$1 billion.

The reorganisation will split the company into five business areas: oncology, diabetes, established markets, emerging markets and animal health. Lilly also plans to establish a Development Centre of Excellence, which will focus on the development of new medicines.

Although Lilly is yet to confirm where the job losses will take place, they will exclude strategic sales additions in emerging markets and Japan.

The company attributed the restructure to upcoming challenges for the company, including patent expiries, increased generic competition, rising costs and slowing innovation.

Lilly is currently preparing for the patent expiry of its top-selling antipsychotic drug Zyprexa (olanzapine), while generic competition has reduced sales of its chemotherapy Gemza (gemcitabine) since it went off-patent.

Further reading - A detailed analysis of the US pharmaceutical market is available from Espicom: The Pharmaceutical Market: USA (published June 2009)

UK - NICE Approves Alimta for NHS Use

The National Institute for Health and Clinical Excellence (NICE) recommended Alimta (pemetrexed) for use in patients with non-small cell lung cancer in August 2009.

Eli Lilly’s Alimta can be used in combination with cisplatin on the NHS as a first-line treatment of locally advanced or metastatic NSCLC if the tumour has been confirmed as adenocarcinoma or large-cell carcinoma. In total, around 80% of lung cancers are the NSCLC type, and these are made up of squamous cell carcinoma (45%), adenocarcinoma (45%) and large cell carcinoma (10%).

Currently, the NHS treatment for NSCLC is Eli Lilly’s chemotherapy Gemzar (gemcitabine), which holds an 85% market share, followed by vinorelbine with an 11% market share.

NICE originally rejected Alimta in 2007, on the grounds that there was no evidence that the drug was more clinically or cost-effective than the other treatments already available.

Further reading - A detailed analysis of the UK pharmaceutical market, including some background information on NICE, is available from Espicom: The Pharmaceutical Market: United Kingdom (published June 2009)