Pharmaceuticals Market Size, Share & Industry Analysis, By Type ({Drugs (Oncology, Diabetes, Infectious Diseases, Cardiology, Neurology, Respiratory, Hypertension, and Others), and Vaccines (Viral Diseases and Bacterial Diseases}), By Distribution Channel (Hospital Pharmacies, Retail Pharmacies, and Online Pharmacies), and Regional Forecast, 2024-2032

The global pharmaceuticals market size was valued at USD 1,661.26 billion in 2023. The market is projected to grow from USD 1,763.90 billion in 2024 to USD 3,148.31 billion by 2032, exhibiting a CAGR of 7.5% during the forecast period.

The rising prevalence of various chronic conditions, including cancer, diabetes, and neurological disorders, among others, along with the growing efforts of companies to develop and introduce novel therapies for these conditions, is expected to fuel the demand for pharmaceuticals in the market. The growing geriatric population prone to various age-related disorders increases the patient pool requiring several treatments and therapies along with increasing healthcare expenditure in emerging countries are some other major factors supporting the growth of the market.

• According to 2023 statistics published by the Indian Ministry of Finance, health expenditure increased from 1.4% of the total GDP in 2018 to 1.9% in 2023.

Also, healthcare investments are growing rapidly and reflecting confidence in medical innovations. According to the 2023 AbbVie’s annual report, the R&D expenditure of the company increased to USD 7.68 billion in 2023 accounting for nearly 13.5% of the total revenue of the company.

The overall impact of the COVID-19 pandemic on the global market was positive, owing to the increasing demand for drugs and vaccines, especially during the pandemic and other chronic conditions among the population. The robust efforts of the manufacturers to curb the supply chain issues and increase their sales and accessibility of the drugs resulted in an increase in their revenues during the pandemic.

• For instance, AstraZeneca generated a revenue of USD 26.62 billion in 2020, witnessing a growth of around 9.2% as compared to the previous year.

Thus, the increasing R&D activities among prominent players, along with the growing number of mergers and acquisitions, are anticipated to spur the global market growth during the forecast period.

Pharmaceuticals Market Trends

Rising Digital Transformation and AI Integration among Pharmaceutical Companies 

The pharmaceuticals market size is witnessing a major transformation, especially after the COVID-19 pandemic. The increasing significance of digitalization and integration of AI tools and solutions in R&D activities, including clinical trials and drug development, among others, is resulting in a rising focus of companies to integrate AI solutions in their operations.

The decentralization of clinical trials and automation in the procedures are leading pharmaceutical companies to increase their R&D spending and activities to develop novel drugs and therapies. The role of digital technology in drug development and precision medicine is inevitable. The growing focus of the companies to accelerate the transformation is a key trend observed in the market.

• According to a 2024 article published by Huma, a healthcare company focused on digital technologies, the number of decentralized clinical trials (DCT) increased from 250 trials in 2012 to nearly 1,300 in 2021.

Other Trends:

Real-world Evidence and Data Management: The increasing use of real-world data for clinical trials among research institutes and companies is expected to transform the healthcare field with innovative therapies in oncology, rare diseases, and other chronic conditions to cater to the rising demand among the patient population globally.

• In June 2024, EPAM Systems, Inc. acquired Odysseus, one of the leading health data analytics companies, with an aim to transform the life sciences value chain through advanced data analytics, data methods, and artificial intelligence (AI).

Innovative Therapeutics: There is a growing demand for specialized treatment, precision medicines, and gene and cell therapies among the patient population, owing to the rising prevalence of various disorders. The rising focus of the companies to strategically collaborate to integrate advanced technologies, and novel approaches to develop innovative and ground-breaking therapies is another major ongoing trend observed in the market.

• In October 2024, McKesson Corporation launched InspiroGene, a dedicated business to focuses solely on supporting the commercialization of cell and gene therapies (CGTs).

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Pharmaceuticals Market Growth Factors

Increasing Prevalence of Chronic Conditions and Infectious Diseases to Propel Market Growth

The rising global prevalence of chronic conditions, such as cancer, diabetes, and others, is leading to an increased patient population in the healthcare system.

• According to 2024 data published by the American Cancer Society, there will be an estimated 2.0 million new cancer cases in the U.S. in 2024.

Additionally, the growing geriatric population is resulting in a rising prevalence of age-related disorders, such as rheumatoid arthritis, cardiovascular disorders, and others.

• For instance, according to a 2021 article published by the U.S. Bone and Joint Initiative, the rate of doctor-diagnosed arthritis in the population aged between 18 and 44 years is 7 in 100. In contrast, the rate has increased to 1 in 2 with some form of arthritis by the age of 65 years and above.

With the rising prevalence and awareness of chronic conditions and infectious diseases among the population, the patient population requiring personalized drugs, vaccines, and therapies is also increasing. Furthermore, growing per capita healthcare expenditure in developed and emerging countries fuels the number of patients undergoing treatment. Thus, the increasing patient population and improving healthcare facilities are anticipated to fuel the demand for drugs and therapies in the healthcare system.

Increasing R&D Focus and Investments by Producers of Pharmaceuticals to Accelerate Market Growth

The rising patient population and increasing demand for treatment and drugs for various therapeutic areas globally are leading to a growing R&D focus of major pharma companies to develop and expand their portfolio along with the pipeline products.

• For instance, as of March 2022, the R&D pipeline of Sanofi includes 91 clinical-stage products for various therapeutic areas such as oncology, autoimmune disorders, neurology, and others, out of which 34 are in phase III trial or waiting for approvals.

The COVID-19 pandemic has triggered producers of pharmaceuticals in the market to shift their focus on R&D spending and investment to develop and deliver innovative medicines and therapies for the unmet clinical needs and demands. Thus, the number of mergers and acquisitions in 2021 among the market players also increased.

• For instance, in December 2021, Pfizer Inc. acquired Arena Pharmaceuticals, a clinical-stage company, to develop innovative therapies for the treatment of several immuno-inflammatory diseases.

The rising prevalence and awareness of chronic diseases and available treatment options are leading to increased efforts of major players in the market to develop and launch new drugs for various rare conditions. These factors are anticipated to augment the demand for pharmaceuticals.

• In October 2021, Novartis AG received U.S. FDA approval for Scemblix to treat chronic myeloid leukemia.

Therefore, COVID-19 recovery is anticipated to augment the number of approvals and launches of novel drugs and therapies in the market.

RESTRAINING FACTORS

Lawsuits and Product Recalls to Hamper Market Growth

The drugs and vaccines are rigorously tested for safety and efficacy through clinical trials before making them available in the market. However, the clinical trials are conducted with a small number of candidates for a short period, and several times, certain side effects are seen in the patients at a later stage owing to their immunological factors, age, and other factors.

Additionally, due to mislabeling, potential contaminants, or poor manufacturing of the products, drug recalls in the market hampers the brand value of the market players, affecting their sales, customer relationships, and reputation.

• In September 2021, Aurobindo Pharma USA Inc. recalled 2,820 bottles of Metoprolol tartrate tablets due to the presence of foreign substances.


• Similarly, in July 2020, Indian drugmakers, such as Lupin, Aurobindo Pharma, and Alembic Pharmaceuticals, recalled products from the U.S. market as per an enforcement report from the U.S. Food and Drug Administration (FDA).

Furthermore, product recalls are anticipated to disrupt the focus of pharmaceutical companies from research and development activities, which will hamper the development of novel therapies for the patient population.

Other Challenges:

Regulatory and Pricing Pressures: The rising focus of government bodies to reduce the pricing of pharmaceutical drugs to increase the affordability and availability among the general population is constantly increasing the pressure on the manufacturers to develop drugs with high efficiency as well as at a lower price to stay in the cut-throat competition in the market.

• For instance, the Prescription Drug Relief Act of 2021 by the U.S. government was passed to reduce prescription drug prices in the country by ending government-granted monopolies for manufacturers who charge drug prices that are higher than the median prices at which the drugs are available in other countries.

Supply Chain Issues: The limited domestic capacities of pharmaceutical companies in the U.S. and other developed countries to produce essential medical ingredients, leading to increasing imports of the products, leads to a major supply chain crisis. The issue was deepened during the COVID-19 pandemic, owing to the guidelines and restrictions during the pandemic.

• According to a 2021 article published by the Harvard Review Business, an estimated 80% of the global APIs are from emerging countries, including China and India, among others.

High R&D Cost and Patent Cliffs: The development and launch of a novel drug, including a large R&D cost and other associated costs, is a major challenge for pharmaceutical companies, especially emerging companies, owing to limited financial resources. Also, the loss of branded drug patents is another factor hindering the growth of the major pharmaceutical companies by hampering their revenue growth.

• UCB S.A.’s Vimpat indicated the treatment of epilepsy that generated net revenue of USD 1.63 billion in 2021 and lost its patent in March 2022.

Pharmaceuticals Market Segmentation Analysis

By Type Analysis

Drugs Segment Dominated the Market Due to Increasing Adoption of Chronic/Infectious Disease Treatments

Based on type, the market is segmented into drugs and vaccines. The drugs segment is further segmented into oncology, diabetes, infectious diseases, cardiology, neurology, respiratory, hypertension, and others. The vaccines segment is bifurcated into viral diseases and bacterial diseases.

Among types, the drugs segment accounted for most of the pharmaceuticals market share in 2023. Growing prevalence and awareness of chronic conditions, such as cancer, diabetes, and others, among the patient population is leading to rising demand for drugs across the globe. This factor favors the increasing sales of generic drugs and prescription drugs for various oncology, diabetes, and anti-infective drugs. Additionally, increasing approvals, launches, and R&D investments in developing effective drugs are estimated to boost segmental growth.

• In October 2021, F. Hoffmann-La Roche Ltd. announced the U.S. FDA approval of Tecentriq as an adjuvant treatment of non-small cell lung cancer in adults.

Also, the increasing prevalence of cardiovascular diseases in the population and growing concern regarding the conditions across the globe are anticipated to boost the diagnosis rate for the conditions among the patient population. Along with this, the awareness about available treatment options is leading to an increase in the demand for cardiovascular drugs and therapies among the patient population.

• According to a 2019 study article published by the Lancet Neurology, the prevalent global cases of stroke were 101.0 million, and there were 12.2 million new cases in the year. The incidence rate increased by more than 35.0% during 2010-2019.

The vaccines segment is expected to witness a higher growth during the forecast period. The increasing number of viral infections and other chronic conditions globally is resulting in growing initiatives by various government bodies, organizations, and institutions for immunization drives in countries, which is crucial to the segment's growth. In addition, increasing number of vaccine candidates in the pipeline portfolio of the major players is also expected to drive the pharmaceuticals market growth.

By Distribution Channel Analysis

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Hospital Pharmacies Segment Dominates the Market Owing to Increasing Patient Visits to Treat Disease Conditions

In terms of distribution channel, the market is segmented into hospital pharmacies, retail pharmacies, and online pharmacies.

The hospital pharmacies segment holds the dominating share in the market owing to increasing patient visits to treat disease conditions. Additionally, the segmental growth was attributed to the increased number of hospitalizations during the COVID-19 pandemic, especially in Intensive Care Units (ICU) and emergency departments.

On the other hand, the growing preference of patients toward specialty clinics is increasing due to the increasing adoption of technological advancements along with specialized care and treatment in specialty clinics. These are some of the major factors attributable to the growth of the retail pharmacies segment. Also, the rising availability of low-cost OTC products is likely to boost the retail pharmacy segment growth.

The online pharmacies segment is expected to witness a lucrative CAGR over the forecast period, owing to the penetration of online portals and websites, such as Amazon, Walmart, and others, to the pharmaceutical industry.

REGIONAL INSIGHTS

Geographically, the global market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

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The market size in North America stood at USD 749.27 billion in 2023. The dominance of this region is attributable to many factors, such as advancements in clinical trials and drug manufacturing in the U.S. and Canada. This factor is provoking key players to develop innovative products in the region, thereby driving market growth. Additionally, the increasing number of drug approvals is also a major factor favoring the market's growth in the region.

• In September 2022, Bristol-Myers Squibb Company received the U.S. FDA approval for Sotyktu, an oral treatment for adults with moderate to severe plaque psoriasis.


• Similarly, in March 2022, Novo Nordisk A/S received the U.S. FDA approval for Ozempic 2.0 mg, subcutaneous injection for treating type 2 diabetes.

Also, technological advancements in the drug development processes and multiple launches of effective and innovative products are likely to aid the market's growth of pharmaceuticals in this region.

• In January 2020, Horizon Therapeutics plc launched TEPEZZA, the first and only approved drug for the treatment of Thyroid Eye Disease (TED), a rare vision-threatening disease.

Europe holds the second position in the market owing to the rising awareness of available treatment options and diagnoses among the patient population for various conditions in the region. The increasing investments in R&D for effective drug development is also a major factor contributing to regional growth. Furthermore, higher sale of drugs/vaccines against chronic diseases is expected to drive market growth during the forecast period.

Asia Pacific is anticipated to showcase the highest CAGR owing to increased awareness among the population about the care & management of disorders, leading to demand for novel products. Moreover, increasing investments of domestic players in the region and mergers with key players are anticipated to surge the demand and accessibility of treatment options in the region.

Latin America and the Middle East & Africa are likely to witness comparatively slower growth due to lower reach and adoption of effective vaccines. However, improving the reimbursement scenario and developing healthcare infrastructure in the regions are anticipated to fuel market growth.

KEY INDUSTRY PLAYERS

Strong Product Portfolio and Growth Strategies by Key Players to Strengthen their Market Position

The global market is fragmented, with many players such as Pfizer Inc., Johnson & Johnson Services Inc., AstraZeneca, Novartis AG, and others. The major players focus on increasing their R&D investments for the development process of novel therapies to meet the unmet demand from the patient population.

• In 2023, Johnson & Johnson Services, Inc. invested nearly USD 15.1 billion in R&D activities, which is around 17.7% of its total revenue in the year.

Pfizer Inc. captured a significant share of the market in 2023, owing to its increased R&D expenditure and launches of drugs for various conditions. Also, increasing collaborations and acquisition of players to strengthen their portfolio and penetration in the market is anticipated to drive the growth of the market in the future.

The increasing strategic initiatives, such as capacity expansion and novel product launches, among others, by the players in the market are expected to fuel the growth of the companies in the market significantly. 

• In October 2024, GSK plc announced its investment of around USD 800.0 million for state-of-the-art drug substance manufacturing and additional drug product manufacturing capabilities to the company’s site in Pennsylvania, U.S.

List of Top Pharmaceuticals Companies:

• Pfizer Inc. (U.S.)


• Johnson & Johnson Services Inc. (U.S.)


• GSK plc. (U.K.)


• Novartis AG (Switzerland)


• Merck & Co., Inc. (U.S.)


• Sanofi (France)


• F. Hoffmann-La Roche Ltd. (Switzerland)


• AstraZeneca (U.K.)


• Novo Nordisk A/S (Denmark)

KEY INDUSTRY DEVELOPMENTS:

• October 2024 – Sanofi partnered with Orano Med for the development of next-generation radioligand medicines against rare cancers.


• July 2024 – Merck & Co., Inc. announced the positive results from its Phase 2b/3 trial of Clesrovimab, which is an investigational preventive monoclonal antibody for the respiratory syncytial virus.


• October 2023 - Bristol-Myers Squibb Company entered into an acquisition agreement with Mirati Therapeutics for the development of therapies for non-small cell lung cancer.


• September 2023 - Pfizer Inc. and BioNTech SE signed a strategic agreement with the Japanese government to supply an additional 10 million doses of COMIRNATY Omicron XBB.1.5 during the special vaccination program in Japan. This agreement enhanced Pfizer Inc.'s product presence in Japan.


• May 2022 - GSK plc. acquired Affinivax, Inc., a clinical-stage biopharmaceutical company, to strengthen the company’s vaccines R&D pipeline, provide access to new technology, and expand the company’s geographical footprint in the Boston area.


• May 2022 - Johnson & Johnson Services, Inc. received the European Commission (EC) approval of the CARVYKTI, a T-cell therapy for treating adults with relapsed and refractory multiple myeloma.


• January 2022 - F. Hoffmann-La Roche Ltd. received the U.S. FDA approval for Vabysmo to treat neovascular and Diabetic Macular Edema (DME).


• March 2021 - Novo Nordisk A/S and Gilead Sciences, Inc., entered into a collaboration to conduct a clinical study to observe the efficacy of Novo Nordisk’s semaglutide.

FUTURE OUTLOOK AND STRATEGIC DIRECTIONS

• Rising Focus on implementation of AI in drug discovery, R&D process, manufacturing, and patient engagement for cost efficiency and overall improved quality of care and decision-making purpose.


• Shift to Patient-Centric Approaches: Increasing reliance on real-world evidence and patient-centric clinical trials as demand grows for more personalized treatments.


• Sustainability and ESG Considerations: Rising expectations around environmental and social governance (ESG) as companies aim for more sustainable and transparent operations.

REPORT COVERAGE

The pharmaceuticals market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, disease indications, and distribution channels. Besides this, the report offers insights into the market trends and highlights key pharmaceutical industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.

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Report Scope & Segmentation