Covid-19 vaccine production and aging populations drive growth for pharmaceuticals industry
The pharmaceuticals sector in the majority of the world’s markets experienced a growth spike in 2021, driven for the most part by vaccine production for Covid-19. This is likely to remain high in the coming years, as a large share of the world’s population has yet to be vaccinated. Ongoing production will also be required to supply booster jabs, as well as vaccinations modified to address new virus variants.
Beyond the demands of the global pandemic, the majority of the world’s developed countries now have ageing populations, with many people living with multiple chronic medical conditions. This will help fuel demand in both pharmaceuticals and healthcare, especially for both over-the-counter medication and treatments for chronic conditions. Demand is also likely to grow in emerging markets, particularly in counties experiencing a growth in household incomes and improvements to healthcare.
Potential constraints to growth may include efforts by individual countries to curb public spending and, in particular, cutting public healthcare costs. Deglobalisation and ESG concerns may also negatively impact growth. The US and EU have plans to re-shore pharmaceutical production in order to safeguard supply chains.
The credit risk situation in the majority of markets is fair to good. In Ireland the credit risk forecast is excellent.
Notable pharmaceuticals trends in individual markets include:
- Ireland really stands out as the strongest performing market in the industry. It’s a relatively small country but accounts for more than 5% of global pharmaceuticals production. It surged to 25% growth in 2021 and will benefit from ongoing vaccine production demands.
- Belgium also benefitted from Covid-19 vaccine production, resulting in an extraordinary 83% value added output increase in 2021 and 15% of total Belgian exports. It is one of Europe’s largest vaccine producers and a major export hub of pharmaceuticals.
- China represents a vast market with annual growth of 9.4% predicted for the period spanning 2019-2025. Producers that are able to sell their products in bulk may enjoy opportunities for high sales volumes. Global producers will need to compete with a growing domestic industry.
- Generic drugs account for about 70% of output in India. However, the pandemic prompted many producers to substantially increase R&D spending, and many are working to reduce their reliance on Chinese products.