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The global pharmaceuticals market size was valued at USD 1,494.67 billion in 2021. The market is projected to grow from USD 1,585.05 billion in 2022 to USD 2,401.22 billion by 2029, exhibiting a CAGR of 6.1% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with pharmaceuticals experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global pharmaceuticals market exhibited a rise of 8.4% in 2020 as compared to 2019.
The healthcare R&D spending in 2021 witnessed tremendous growth, resulting in a higher number of clinical trial activities and drug approval and launches in 2021 compared to the previous years. This was due to the rising adaptation of this industry toward the pandemic.
Also, healthcare investments are growing rapidly and reflecting confidence in medical innovations. According to the 2021 annual report of AstraZeneca, the total R&D spending in 2020 was 5,991.0 million, which was increased by 62.5% in 2021, wherein the total R&D spending was valued at USD 9,736.0 million. Therefore, to provide patients access to treatment without unaffordable out-of-pocket costs, today’s development pipeline represents the frontier in having the potential to transform people's lives during the forecast period.
Speedy Recovery and Adaption from Slight Disruptions in Supply Chain and Drug Development to Augment the Market Growth
The COVID-19 pandemic slightly hampered the growth of this market in 2020 in several ways. The pandemic directly affected production and demand, disrupting pharmaceutical products' supply chain and logistics. The number of successful clinical trials and R&D activity across therapy areas such as diabetes, hypertension, and others declined as the industry shifted its focus and prioritized infectious diseases, respiratory diseases, and vaccines.
However, the impact of COVID-19 on the pharmaceuticals market growth was short-term. Pharmaceutical companies effectively recovered the supply chain and logistics shortage by adopting various strategies and plans. The COVID-19 pandemic positively impacted this market by the end of 2020 with increased sales of drugs and vaccines, R&D investment, and pipeline portfolio of the major players in the market. The pipeline portfolio for infectious diseases and vaccines witnessed a significant rise driven by COVID-19 related to treatments and immunization programs.
Additionally, the number of mergers and acquisitions along with drug approvals and launches in the pharmaceutical industry grew significantly in 2021 owing to the COVID-19 pandemic.
Thus, the market adapted strongly to the impact and underwent necessary and timely changes to minimize the impact and carry out the processes smoothly.
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Growing Adoption of Digital Technologies across Various Fields in the Pharmaceutical Industry to Transform Healthcare Services
The impact of COVID-19 on the pharmaceuticals market led to increased adherence to decentralized clinical trials. Primary factors associated with this include COVID-19 restrictions, including social distancing, quarantine, and fear of getting infected by COVID-19 among the patient population. These factors hampered the overall efficiency, productivity, and outcomes of the clinical trials, which led to an increased demand for decentralized clinical trial processes, from patient selection and enrollment to studying the trial outcomes. 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 rising demand increased the collaborations among pharmaceutical companies with AI-driven companies to enable automated clinical trials and patient care delivery models across the healthcare systems.
Additionally, AI algorithms have changed the pattern of disease diagnosis, thus promoting smart hospitals and telemedicine. This factor is leading to an increased demand for precision medicines and the rising number of clinical studies and trials related to rare conditions.
Increasing Prevalence of Chronic Conditions and Infectious Diseases to Propel the 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.
Additionally, the growing geriatric population is resulting in a rising prevalence of age-related disorders such as rheumatoid arthritis, cardiovascular disorders, and others.
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 Pharmaceutical Companies to Accelerate Market Growth
The rising patient population and increasing demand for treatment and drugs for various therapeutic areas worldwide are leading into a growing R&D focus of major pharma companies to develop and expand their portfolio along with the pipeline products.
The COVID-19 pandemic has triggered pharmaceutical companies 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.
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 market growth.
Therefore, COVID-19 recovery is anticipated to augment the number of approvals and launches of novel drugs and therapies in the market.
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, the drug recalls in the market hampers the brand value of the market players affecting their sales, customer relationships, and reputation.
Furthermore, product recalls are anticipated to disrupt the focus of the pharmaceutical companies from research and development activities, which will hamper the development of novel therapies for the patient population.
Drugs Segment to Dominate Attributable to Increasing Adoption of Chronic/Infectious Disease Treatment
Among types, the drugs segment accounted for most of the market share in 2021. Growing prevalence and awareness of chronic conditions such as cancer, diabetes, and others among the patient population is leading to rising demand for drugs worldwide. This factor favors the increasing sales of generic and prescription medications 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.
Also, the increasing prevalence of cardiovascular diseases in the population and growing concern regarding the conditions across the world 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.
The vaccines segment witnessed significant growth in 2021 compared to 2020 due to the increased demand for vaccines for COVID-19 prevention. The increased number of COVID-9 cases worldwide led to more initiatives by various government bodies, organizations, and institutions for immunization drives in countries, which is crucial to the segment's growth. The segment is expected to grow at a normal pace owing to the increasing number of vaccine candidates in the pipeline portfolio of the major players.
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Retail Pharmacies Segment to Dominate Owing to Growing Demand and Availability of Over-the-Counter (OTC) Products
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 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 pharmacy segment is expected to witness a lucrative CAGR over the forecast period owing to penetration of online portals and websites, such as Amazon, Walmart, and others, to this industry.
North America Pharmaceuticals Market Size, 2021 (USD billion)
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The market size in North America stood at USD 610.29 billion in 2021. 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 in the region is also a major factor favoring the market's growth in the region.
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.
Europe holds the second position in the market owing to the rising awareness of available treatment options and diagnosis among the patient population for various conditions in the regions. The increasing investment in R&D for effective drug development is also a major factor contributing to the segment's growth. Furthermore, higher sale of drugs/vaccines against chronic diseases is expected to drive 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.
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, 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.
Pfizer Inc. captured a significant share of the market in 2021 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 future.
An Infographic Representation of Impact of Covid-19 on Pharmaceuticals Market
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The research 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 industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.
Value (USD billion)
By Distribution Channel
Fortune Business Insights says that the global market size was USD 1,494.67 billion in 2021 and is projected to reach USD 2,401.22 billion by 2029.
In 2021, North America stood at USD 610.29 billion.
The market will exhibit steady growth at a CAGR of 6.1% during the forecast period (2022-2029).
The drugs segment is expected to be the leading segment in this market during the forecast period.
The increasing prevalence of diseases such as cancer, diabetes, and infectious disorders and the introduction of advanced products by market players are major factors driving the markets growth.
Pfizer Inc., Johnson & Johnson Services Inc., and AbbVie are major players in the global market.
North America dominated the market share in 2021.
The increasing burden of under-diagnosis of disease and the growing demand for effective products by emerging nations are expected to drive the product adoption in the market. Additionally, the launch of OTC drugs at affordable prices is expected to drive market growth.
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