The sale of specialty products historically has been through hospital or specialized care settings that can provide the infrastructure
required for the administration of biologically complex products. With advances in technology and new classes of drugs, we
have seen a trend towards increased sales through the retail sector. Existing products also have been recast in formulations
that are more amenable to use in the retail sector. Examples of these innovations include oral administration rather than
injection for rheumatoid arthritis, multiple sclerosis, hepatitis C virus, cancer, and a number of orphan-drug diseases;
more robust formulations that have less need for special storage requirements, like self-injectable pen devices; or subcutaneous
formulations, like Roche's Rituxan, which can be administered by health professionals outside of a hospital or home care
The growth of this retail market is most pronounced in the US (see Figure 3). In 2008, if we break down the 21.5% of specialty
from Figure 1, we see that 12.4% of total pharma products in terms of value were specialty products administered through the
hospital setting and about 9.1% through the retail setting. By 2013, the hospital setting remained relatively stable at 13%
whereas the retail setting increased to 14%.
Figure 3: Specialty market percent of total sales by channel (Data: IMS)
For the US, this large movement of value through retail channels sets up newer challenges for pharmacy benefit managers who
are now saddled with larger payouts for products which they were not necessarily having to reimburse before. This means that
specialty products are now on the radar screen for payers, suggesting that increased sensitivity to cost among the reimbursement
community will have an as yet unquantifiable impact on future rates of sales growth, in a segment where price has rarely been
a contentious issue.
In the EU5, there seems to be a higher proportion of specialty product usage than in the US, and a rise in both hospital
and retail sales. This is being driven by adoption of newer therapies under the single-payer structure of these markets, and
the proportional increase is amplified by the declines in spending on traditional medicines related to patent expiries, widespread
take up of generics, and pricing and reimbursement controls. This comparison to the US may be impacted by the fact that sales
are based on the ex-manufacturer invoice price, since discounting is more prevalent in the EU. For Japan, the retail sector
has not increased significantly, presenting an opposite picture to the US. This is largely because complex therapies continue
to be administered in hospitals.
We would expect that retail sales for specialty in the BRICMT and Tier 3 countries would not increase significantly given
the traditional infrastructure difficulties of selling these products outside of the hospital setting; in fact, the share
of specialty medicines in retail in BRICMT has actually declined over the past five years.
When looking at the Pharma 50 companies sales in specialty over the past year by channel, we can see the accelerated pace
of growth in this market (See Figure 4). In almost every geography, there has been an increasing surge in specialty products
driven mostly by the Pharma 50 companies. This effect is most pronounced in the EU5 and US. It is also notable that the EU5
share of sales that is specialty exceeds that of the US, as does the growth rate for top 50 companies, but this comparison
may also be impacted by the use of ex-manufacturer invoice price. Also interesting is the increasing gap between Japan and
the BRICMT markets in their specialty share of overall spending, as Japan has encouraged greater usage of specialty products,
especially in cancer and autoimmune diseases.
Figure 4: Specialty market percent of total sales by channel and by Pharma 50 past 5 years (Data: IMS)
Therapeutic area growth
When looking at the top therapeutic areas in the specialty market, we see that the top 7 out of 22 categories usually account
for anywhere from 70% to 80% of the value depending on the geography (See Figure 5). From 2008-2013, these therapy areas have
stayed a relatively stable percent of value within the geographies, except for the US, where they increased from 72% to 76%
of total US sales of specialty products.
Figure 5: Specialty market percent of total sales by therapeutic area (Data: IMS)
The leading specialty categories are oncology, autoimmune (including treatments for rheumatoid arthritis, Crohn's disease,
ulcerative colitis, psoriasis, psoriatic arthritis), HIV, multiple sclerosis, erythropoietins, hematopoietic growth factors
(e.g., Neupogen or Neulasta), and hepatitis C treatments. This group of products represents the most commonly used, and often
most expensive specialty medicines. They also represent a strong level of recent innovation. For example, the US and EU5 have
seen growth in oncology, autoimmune, MS, HIV, and hepatitis C categories, driven by the availability of newer medicines. Of
course, the wide range in share of sales for the different therapy areas across geographies highlights differing priorities
for medicine spending, along with differing disease prevalence and affordability for high-cost medicines.
The value and volume of specialty products is increasing substantially across all geographies, and this is being driven by
the increased development of specialty medicines across a range of diseases. This is a positive indicator that innovation
in medicines is continuing to expand the societal and economic benefits from investments in medical progress. It may be that
as diseases addressed by these products receive higher recognition by societies and governments, the costs will be more easily
shared across geographies and among newer stakeholders.
It is also critical to note that growth of the specialty market can be linked to rising global incomes. For Pharmerging markets,
this will continue to be true in the future. The rise and empowerment of the middle class, increased initiatives by pharmaceutical
companies in partnering for the expedited delivery of healthcare, and greater private insurance to augment government healthcare
funding will all contribute to patients gaining greater access to medicines.
The growing specialty market is a ripe opportunity for companies that are well-established in the field and have considerable
marketing presence. A key factor for success of these companies will be to develop innovative solutions that distribute costs
of these therapies between manufacturers, payers, and patients in order to achieve broader access in and between geographies
and across patient populations. The challenges are many, however, and are not limited to protecting IP in emerging markets
or addressing payer resistance to prices for innovative products in the G7 countries. This is especially true when access
decisions and pricing negotiations in one country have a trickle-across effect on others.
Waseem Noor is a Vice President with IMS Consulting Group and leads the global strategy and portfolio analysis team. He can be reached
Michael Kleinrock is Director of Research Development at the IMS Institute for Healthcare Informatics. He can be reached at firstname.lastname@example.org