Sweden’s Elderly Population Driving Pharmaceutical Market Growth

Wednesday 17 April 2013, Amsterdam

Life expectancy in Sweden is one of the highest in the world, implying an increasingly large elderly population in the future, and subsequent growth in demand for healthcare, states a new report by research and consulting a firm.  The new report shows that healthcare for the elderly is already a priority in Sweden. National healthcare expenditure accounted for 9.8% of GDP in 2012, and the country’s allocation to elderly care stands far above the EU average in proportion to GDP. A total of SEK95.9 billion, (US$14 billion or €10.7 billion) was spent on healthcare for the elderly in 2010, and the Swedish government is investing a further SEK4.3 billion (US$0.6 billion or €0.5 billion) until 2014 to improve health and social care for the most infirm members of the elderly population. Statistics demonstrate that over the next 35 years, the proportion of the Swedish population above the age of 65 will increase by almost 40%, and this will inevitably lead to higher taxes for the working population in order to meet inflating healthcare needs. Sustaining economic growth and quality healthcare will therefore become a challenge.

Sweden’s government bases its pharmaceutical pricing policy on drug effectiveness, with the value of pharmaceuticals judged in terms of extended patient life expectancy or significantly improved quality of life. In attempts to curb healthcare spending, the government also promotes mandatory generic substitution through the Pharmaceutical Benefits Scheme (PBS), allowing pharmacists to dispense the lowest priced generic substitute of any prescribed drug. Generic drugs accounted for approximately US$882.5m in 2012, and the generics market is forecast to increase at a higher Compound Annual Growth Rate (CAGR) of 5.8% to reach US$1.4 billion in 2020.
Generics have held a low revenue share of around 15% over the last few years due to their low price, but the price of branded products with high-volume sales fell by 80–95% over the same time period following patent expiries, showing the level of price competition between generic manufacturers. This will act to restrict market growth somewhat, and lead to a lack of innovation by pharmaceutical and biotechnology companies now unable to turn handsome profits, but this trend caters perfectly to Sweden’s need to cut healthcare costs. The pharmaceutical market in Sweden was valued at US$5.7 billion in 2011, and is expected to grow at a CAGR of 2.6% to reach US$6.9 billion in 2020.