IMS Health Reports U.S. Prescription Sales Jump 8.3 Percent in 2006, to $274.9 Billion

NORWALK, Conn.--(BUSINESS WIRE)--Mar 9, 2007 - IMS Health (NYSE: RX), the world's leading provider of market intelligence to the pharmaceutical and healthcare industries, today reported that U.S. prescription drug sales grew 8.3 percent to $274.9 billion in 2006. Growth was fueled by the Medicare Part D prescription benefit, the increased utilization of generics within new therapy classes, and the launch of new drugs targeted to specific diseases such as cancer and diabetes.

In 2006, total U.S. dispensed prescription volume - the number of prescriptions dispensed to patients - grew at a 4.6 percent pace compared with 3.2 percent in 2005. Prescription product sales at wholesale prices and dispensed prescriptions are derived from the IMS National Sales Perspectives(TM) and IMS National Prescription Audit(TM) offerings, respectively.

"Demand for pharmaceutical products in the world's largest pharmaceutical market grew significantly for the third straight year," said Diana Conmy, corporate director, IMS Market Insights. "This growth was driven by factors that include an aging population and the introduction of the Medicare prescription drug benefit, which increased prescription coverage to the previously uninsured and underinsured, and provided generous plan benefits to seniors."

Looking ahead, IMS expects U.S. prescription sales growth to decline in 2007, but remain in the range of 6 to 9 percent compounded annual growth through 2010 as the Medicare Part D benefit is annualized and more generic products enter the market, driving the cost of prescriptions lower.

According to Conmy, "Legislative attempts to control drug expenditures, the increased influence of payers to drive more cost-effective healthcare, generics competition, and the introduction of new biosimilars will impact U.S. prescription growth over the next five years. The annualization of Medicare Part D also will affect growth rates for this year. These market realities put new pressures on manufacturers to gain a deeper understanding of evolving market dynamics when launching new products, and intensify the need for them to focus on health economics and outcomes research to demonstrate the value of their medicines."

Growth Factors

Medicare

Medicare Part D was an important contributor to strong pharmaceutical sales growth in 2006. According to the Centers for Medicare & Medicaid Services (CMS), more than 38 million Medicare beneficiaries had some form of prescription drug coverage by June 2006. Although a sizeable number of beneficiaries without coverage - approximately 3 million - did not enroll, those who were previously uninsured and enrolled benefited from access to needed medicines at a more affordable cost. This federal program lifted retail prescription volume by an estimated 1 to 2 percentage points and pharmaceutical sales by just under 1 percentage point.

CMS, wanting to maximize access to Part D, required insurers to reimburse for substantially all of the brands in six large, highly utilized classes, including: anti-depressants, anti-psychotics, anti-convulsants, anti-retrovirals, anti-neoplastics, and immuno-suppressants. Due to this requirement, these classes together comprised nearly one-fifth of U.S. pharmaceutical sales in 2006.

Prescriptions dispensed through a Medicare Part D program accounted for 17 percent of retail prescriptions by year end. Of the top 20 products dispensed by Medicare Part D prescription volume, 15 were unbranded generic drugs. By the end of 2006, utilization of unbranded and branded generics through Medicare Part D accounted for 63 percent of all dispensed prescriptions.

"Medicare Part D clearly was the most significant event to occur within the industry in 2006," said Gerhard Gallwitz, vice president of Managed Care for IMS. "Consumers found the program especially beneficial because it offered greater choices and better access to medicines with fewer formulary restrictions than commercially available plans. For pharmaceutical manufacturers, Medicare Part D helped increase product demand through a larger pool of patients with prescription drug coverage."

Generics Growth

The second major growth factor in 2006 was prescription volume increases for less-expensive generic drugs. Although volumes rose across a number of therapeutic areas, the emergence of new generic forms of lipid regulators, anti-depressants and inhaled nasal steroids resulted in significant double-digit growth for these classes of medications. In 2006, prescription volume of unbranded generics grew by 13 percent. Sales of unbranded generics grew by 22 percent in 2006, driven by sales of $911 million for Teva's simvastatin, generic Zocor(R); $902 million for Apotex's clopidogrel, generic Plavix(R); and $480 million for Greenstone's sertraline, generic Zoloft(R). Other brands to lose patent protection and experience generic competition were Pravachol(R), Flonase(R), and Mobic(R).

"Last year, we saw two of the most successful and largest brands - Zoloft and Zocor - lose patent protection," said Conmy. "Although the impact to the market was moderate, competitive pricing in generics is expected to intensify. We expect to see the full effect of these patent expirations, as well as that of additional branded blockbuster drugs such as Norvasc(R) and Ambien(R), impact the market in 2007."

Product Innovation

Biotech products again remained a major growth engine in 2006, with sales increasing 20 percent to $40.3 billion. Within this market, Amgen's Aranesp(R) led the way, growing 42 percent on the year to reach $3.9 billion. Amgen's Enbrel(R) rose 12 percent to $3.1 billion, and Amgen's Neulasta(R) climbed 28 percent to $2.9 billion. Major cancer-fighting therapies also realized strong growth: Rituxan(R) grew 18 percent to $2.1 billion, Avastin(R) rose 79 percent to $1.7 billion and Herceptin(R) increased 66 percent to $1.2 billion.

Also noteworthy within the biotech market was the landmark approval of a biosimilar. In May 2006, the U.S. Food and Drug Administration (FDA) approved Sandoz's Omnitrope, a human growth hormone. Approved under the existing 505(b)2 pathway, the FDA's decision provides a narrow opening for other biosimilars. Omnitrope had still not been launched as of the end of 2006.

In 2006, the FDA also approved 18 new molecular entities (NMEs), four therapeutic biologics and four vaccines, including Merck's ground-breaking cervical cancer vaccine Gardasil(R). This is up slightly from the 18 NMEs and two therapeutic biologics approved in 2005, which was the lowest approval number since 1980. Perhaps more notable than the actual number of new products approved was the market potential of the products launched. Among those expected to reach blockbuster status (over $1 billion in annual sales globally) are Merck's Gardasil and Januvia(TM) (the first of a new class of diabetes treatments); Genentech's Lucentis(TM) (for macular degeneration); Pfizer's Sutent(R) (for renal cell carcinoma); and Celgene's Revlimid(R) (for transfusion-dependent anemia).

In 2005, there were a number of new brand launches that became top performers in 2006, including Pfizer's Lyrica(R) (for epilepsy/pain); Sepracor's Lunesta(R) (for insomnia); and Amylin/Lilly's Byetta(R) (for diabetes).

Market Outlook

IMS is forecasting U.S. pharmaceutical sales growth at 6 to 9 percent through 2010 as a result of the influence of lower-priced generics. Generics will have a greater impact on 2007 performance compared to other years as the market realizes the full impact of the $14 billion in branded products that were exposed to generics in 2006. It is anticipated that the primary drivers behind the market trends include: the introduction of new, novel biologics and vaccines, the annualization of the Medicare Part D drug benefit, future patent expiries and increased competition among generics.

Additionally, four to seven new products with potential global blockbuster status are expected to launch in the U.S. in 2007. Along with the 2006 class of innovative new products, the 2007 class will help offset the lower prices for some generics in 2007 and the additional $12 billion in brand value likely to be exposed to generics this year.

Top-Line Market Statistics and Summaries

IMS charts detailing 2006 U.S. market performance by categories that include distribution channels, therapy classes, prescription products and companies can be viewed on the IMS website at www.imshealth.com/media.

About IMS

Operating in more than 100 countries, IMS Health is the world's leading provider of market intelligence to the pharmaceutical and healthcare industries. With $2.0 billion in 2006 revenue and more than 50 years of industry experience, IMS offers leading-edge market intelligence products and services that are integral to clients' day-to-day operations, including portfolio optimization capabilities; launch and brand management solutions; sales force effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve ROI and the delivery of quality healthcare worldwide. Additional information is available at http://www.imshealth.com.

March 8, 2007

Trademarks referenced in this press release are the marks of their respective owners.

Contact

IMS Public Relations
Lance Longwell, 610-834-5338
llongwell@us.imshealth.com

Posted: March 2007


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