The UK pharmaceutical wholesale market is being impacted by the increased volume of generic drugs entering the market as patent protection finishes for a significant volume of important drugs. This new development is placing additional pressure of profits within the wholesale sector. The UK pharmaceutical wholesale market is already reporting low profit margins of just 1% to 2%. The new distribution strategies adopted by the leading manufacturers is not helping either and this has resulted in further consolidation.
The pharmaceutical wholesale sector is under pressure despite the European market boasting some 3,000 pharmaceutical manufacturers producing over 50,000 products for 130,000 retail outlets. The profit margins in the pharmaceutical wholesale market are just within the range of 1% to 2%; significantly lower than the rest of the pharmaceutical market. Many of the key drug products in the market place are losing their patent protection and as a result the pharmaceutical wholesale sector is entering a crucial period. The increased volume of generic products within the pharmaceutical sector is likely to reduce pricing and as a result reduce profit margins within the wholesale sector.
In the UK pharmaceutical sector, an increasing volume of upstream manufacturers have adopted new distribution models that involve a very limited number of wholesalers in the distribution of their branded pharmaceuticals. This recent development has forced wholesale companies to either adopt new strategies or move out of the market altogether which has resulted in consolidation of the sector.
The healthcare austerity measures combined with the effect of the patent cliff has dampened any growth in the uk pharmaceutical wholesale market. Revenue for the Pharmaceutical Wholesaling industry is expected to decrease by 0.9% in 2013-14. However, an ageing population and medical advances are forecast to contribute to an overall increase in revenue. Over the five years through 2013-14 revenue is estimated to grow at a compound annual rate of 0.9% to total £34.7 billion.
Over the next five years, the UK pharmaceutical wholesale market is forecast to report stronger growth although the increased volume of generic drugs entering the market is set to further reduce profit margins within the wholesale sector. Revenue is forecast to grow at a compound annual rate of 2.1% over the five years through 2018-19, to be worth an estimated £38.5 billion. The ageing population in the UK is forecast to drive growth in the pharmaceutical wholesale market against factors which have dampened performance over recent years.
For more information on the UK pharmaceutical wholesale market, see the latest research:UK Pharmaceutical Wholesale Market
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