Healthcare spend going up in Q1 forecast round but risks remain elevated

In our Q1 2021 forecast round, we raised our global healthcare spending forecast for 2021, as the resurgence in COVID-19 infections triggered additional spending. Global healthcare spending in 2021 is now forecast to go up to USD9.23 billion, up from a previous forecast of USD9.14 billion. But risks in the market access space, as measured by our proprietary MARS ratings which are released at the same time as our forecasts, remain elevated due to policy developments and market uncertainties associated with the pandemic.

Key forecast changes made in January 2021 include:

• The Japanese government has set out a record draft general-account budget of USD320 billion for FY 2021. We have hence raised Japan's total healthcare spending growth to 4.1% and 2.6% in 2021-2022, up from 2.5% and 2.6% in previous forecast.
• The surge in hospitalizations in the United Kingdom and indications in the spending review for 2021 that healthcare and life sciences research will receive additional funding have led us to raise UK's health spending growth to 4% for 2022, up from previous forecast of 2.8%.
• Italy's coalition government has approved a EUR20 billion recovery package for the healthcare sector. We have hence raised our forecasts for health spending growth to 3.5%, 2.5% and 2% in 2021-2023, up from previous forecasts of 1% 0.1% and 0.4%.
• We have also made the following adjustments for growth in health expenditure and/or pharma sales:
  1. Health expenditure growth in France raised to 5%, up from previous forecast of 3.5% for 2021, while growth in pharma sales lowered to 2.3%, down from previous forecast of 2.6%;
  2. Health expenditure growth in Sweden raised to 5.1% in 2021, up from previous forecast of 4.5%, while growth lowered to 4% in 2022, down from previous forecast of 5%.
  3. Ireland's growth in pharma sales raised to 7.5% and 5% for 2020 and 2021, up from previous forecasts of 0.4% and 4%.

In terms of global market access risk, unfavorable developments are mainly reflected in the increased risk rating of our event driven measures, as well as a higher economic, business and political risk.

Key negative event driven measures in Q4 2020 included - among others:

• Spain's major changes to its therapeutics positioning reports (IPTs) involving the requirement of additional economic evaluation data;
• Japan's first out-of-cycle drug price revision scheduled for FY2021;
• United States' potential reform to drug pricing, potentially allowing Medicare to negotiate drug prices for Part D and implement international reference pricing to cap prices; and
• Poland's latest pricing and reimbursement reform, involving a restriction of access to the "emergency access" system.

Our Healthcare and pharmaceutical forecasts provide quarterly updated history data and 10-year forecasts for 70 countries, including healthcare expenditure, pharmaceutical sales, pharmaceutical trade, national income account data and demographics. Data can be accessed through the searchable Data Browser, currently providing 11,866 data series.

Our Market Access Risk Scores (MARS) are designed to compare and contrast market access climate in 75 countries around the world. The system - under which qualitative and quantitative factors which affect market access are separately rated in each country - provides a comprehensive picture of the quality of conditions and the level of stability of the market access environment encountered by pharmaceutical companies in each country.

Posted 10 February 2021 by Anne Charlotte Ackermann, M.A, Principal Analyst, Life Sciences and

Milena Izmirlieva, Director, Life Sciences Research, IHS Markit and

Niklas Wallin Bernhardsson, Consultant, Life Sciences, IHS Markit