Australian pharmaceutical market to be worth $25 billion by 2020, finds report

Growth will be the result of government reforms and increased market access, says GlobalData

The Australian pharmaceutical market is expected to be worth $25 billion by 2020, says GlobalData report

Australia’s pharmaceutical market is set to rise from just over $22.85 billion in 2016 to $25.2 billion by 2020, registering a compound annual growth rate (CAGR) of 2%, according to research and consulting firm GlobalData.

This modest growth will be driven by good market access to pharmaceutical drugs, increasing awareness of the need for the early detection of lifestyle and chronic diseases, the subsidised cost of prescription medicines through the Pharmaceutical Benefits Scheme (PBS) for all eligible patients, and the annual addition of new drugs to the PBS drug list, the report, CountryFocus: Healthcare, Regulatory and Reimbursement Landscape – Australia, states.

In 2015, the Australian government spent $22.03 billion on R&D in medical and health science and exported $3.53 billion of pharmaceutical products.

The medical device market was valued at $8.85 billion in 2015 and is projected to grow at a CAGR of 0.1% to $11.44 billion by 2020.

These positive growth trends can be primarily attributed to: an increasingly elderly population; universal health coverage; and government initiatives, says GlobalData.

According to GlobalData, Australia's pharmaceutical market currently represents a knowledge-based, technology-intensive industry, and is positioned to advance Australia’s economic output and social wellbeing.

The industry receives significant financial support from the government through the sale of medicines listed in the PBS and an R&D tax incentive.

Suppliers to the PBS number 140 separate firms, the report says.

There are a number of opportunities for potential investors in the Australian pharma industry, including increasing foreign direct investment (FDI), the emerging generic drugs market, and a favourable tax environment, in which the Export Council of Australia and the Medical Technology Association of Australia have proposed Australian Innovation and Manufacturing incentives to reduce the tax payable on profits derived from the commercialisation of intellectual property, the report says.

In 2014, FDI was estimated at $46.3 billion, having grown at a CAGR of 0.4%.

The emphasis being placed by the PBS on the usage of generics is expected to spur growth.

Although this may constrain market valuations, it will open up the market to generic competition and stimulate the growth of the local generic manufacturing industry, says GlobalData.