RESEARCH TRIANGLE PARK, N.C. — Global spending on medicines — based on invoice price levels — is expected to grow at 3-6% CAGR through 2026 to reach about $1.8 trillion by 2026, including spending on COVID-19 vaccines and novel therapeutics, according to a new report, The Global Spending and Usage of Medicines, released by the IQVIA Institute for Human Data Science.

The total cumulative spending on COVID-19 vaccines since their introduction through 2026 is projected to be $251 billion, largely from the initial wave of vaccinations to be completed by 2022 in most countries. In subsequent years, booster shots are expected to be required annually or more often as the limited durability of immunity and the continued emergence of viral variants drive recommendations for additional inoculations.

“While the pandemic has been extremely disruptive to patients and health systems, underlying pre-pandemic trends in medicine use and spending remain significant drivers of the outlook, including the impact of record levels of new drug launches and patent expiries of small molecule and biologic drugs,” said Murray Aitken, IQVIA senior vice president and executive director of the IQVIA Institute for Human Data Science. “The ability of countries around the world to roll out a global vaccination program — overcoming hesitancy from patients and persistent logistical challenges — will be key to the transition to an endemic virus and have widespread impacts on the outlook for all medicine use through 2026 and beyond.”

A few key highlights of the report include:

• Substantial global market growth from COVID-19 vaccines and therapeutics: Global spending on vaccines is projected to total $251 billion over the six years from their first introduction to 2026. Novel therapeutics for the virus will total $58 billion over the same period, for a total of $309 billion of COVID-19 vaccine and therapeutic spending. The pandemic will reduce non-COVID spending by a total of $175 billion over the same period, and the net increase in spending globally is expected to total $133 billion.

• Pharmerging markets: In pharmerging markets, absolute growth will be led by China, which is expected to grow at a rate of 2.5-5.5% and add more than $30 billion in annual spending by 2026, driven by greater uptake and use of new original medicines.

• The U.S. market: On a net price basis, the U.S. market is forecast to grow 0-3% CAGR over the next five years, down from 3.5% CAGR for the past five years. Historically high numbers of new products will contribute $114 billion in spending over five years, up from $93 billion the last five years but representing a smaller share of the market. The largest drivers of the slowing growth rate are reduced price growth for brands and the increased impact of brand losses of exclusivity, including biosimilars, which more than doubles to $141 billion over five years compared to $57 billion in the prior five years.

• Japan: The third-largest global market will have flat-to-declining medicine spending, including the likely shift from biennial to annual price revisions, which started with off-cycle price cuts in 2021. Current pricing policies that reward innovative patent-protected brands are expected to continue, coinciding with the ongoing shift to generics for older medicines.

• Europe: Spending in Europe is expected to increase 3-6% CAGR or a total of $51 billion over the five years to 2026, not including spending on COVID vaccines and therapeutics.

• Novel medicines: New brands in developed markets through 2026 are projected to increase in absolute spending to $196 billion, up more than 20% over the past five years, and continuing a historically high period of spending on novel medicines and largely recovering from the impact of the pandemic. New active substances launches are also projected to continue at higher levels than seen in the past decade, with an average of 54-63 per year, totaling 290-315 for five years through 2026.

• Loss of brand exclusivity and rise in biosimilars: The impact of exclusivity losses will increase to $188 billion over the next five years, mostly due to the availability of biosimilars, which will have greater impact in some countries than small molecules. The cumulative incremental savings in the years 2022-2026 from new biosimilars will reach an estimated $215 billion.

• Therapy area growth: The two leading global therapy areas — oncology and immunology — are forecast to grow at 9-12% and 6-9% CAGR, respectively, through 2026, lifted by significant increases in new treatments and medicine use and offset by the impact of biosimilars. Oncology is projected to add 100 new treatments over five years, contributing to an increase in spending of $119 billion to a total of more than $300 billion in 2026. Immunology growth is projected to slow to 6-9% from 16.9% CAGR over the past five years as biosimilars provide lower-cost treatments and offset growth from volume and drug launches. In addition, many new therapies are expected in neurology, including novel migraine therapies, potential treatments for rare neurological diseases and potential therapies for Alzheimer’s and Parkinson’s diseases.

The full version of the report, including a detailed description of the methodology, is available at www.IQVIAInstitute.org. The study was produced independently as a public service, without industry or government funding.