A Growing Industry

The U.S.-branded prescription universe consisted of more than 650 million prescriptions filled in 2024 across a wide range of traditional and specialty products. Cresting $1 trillion in spending, total industry size at list prices grew 45% from 2020, while net sales revenue rose 40%.

Drug pricing in the U.S. market is complex with many discounts provided by the manufacturer as products are distributed into the supply chain and ultimately to patients. Representing an estimated $536 billion in spread pricing in 2024, the total discounts being provided by manufacturers have grown faster than total sales as margins have dropped from 57% in 2015 to 48% in 2024. This has occurred as more competition enters the market in large therapeutic areas driving drug rebates higher. Pharmacy benefit manager consolidation has increased negotiating power; new policies introduce higher statutory discounts; and utilization from the 340B program has increased, amongst other drivers. The estimated $536 billion in total discounts provided to the market in 2024, were nearly equal to the entire market at the list price of $544 billion in 2015.

Year over year, from 2023 to 2024, estimated U.S. net revenues grew by +11% to $487 billion. This was predominantly driven by a small subset of 70 branded products. Specialty medications grew $27 billion, driven largely by oncology and immunology. Traditional markets grew $16 billion, with $12 billion in growth coming from diabetes and new obesity treatments. The high concentration of growth coming from a small subset of products across several therapeutic areas demonstrates the research and development focus of the past two decades. Understanding where growth is occurring is important as the next generation of products enters the market.

Brand & Generic, Retail & Specialty

Of the thirty largest therapeutic classes, only diabetes, hematology, obesity, and immunology have branded share of market over 40%. Most therapeutic areas have high generic utilization, often exceeding 90%, and many, such as hypertension, mental health, and the lipid regulators, are as high as 99%. This demonstrates an important mechanism of both protected patent life as well as the economics of lifecycle management. As products age and lose exclusivity, net prices are reduced. The system savings created leaves room for new products to come into the market, and benefits patients as out-of-pocket costs come down and drugs become more affordable.

Breaking down the 2024 branded market by specialty and traditional molecules, specialty medications accounted for $262 billion, over $100 billion more than in 2020 while making up 53% of net sales in 2024. One driver of the $100 billion growth has come as immunology defined daily doses, and the estimate of days of therapy used increased by 72% since 2019. With over 1.4 billion days of therapy of immunology medicines used by patients in the U.S. in 2024, patients have benefited from new molecules, new mechanisms of action, expanded indications, and widespread utilization. More broadly, of the 136 million specialty prescriptions in 2024, 59% were generic, demonstrating that even for high-need patient populations treated with complex molecules, generic utilization is common.

Projecting the impact of loss of exclusivity can be challenging. Many market factors impact generic and biosimilar uptake as market inertia battles with net costs and system savings. Over the next 5 years, patent losses could impact $91 billion in branded revenue, up $13 billion from the previous 5 years. Major traditional retail classes such as diabetes, respiratory, and cardiovascular are expected to have market leading products go generic. At the same time, large specialty classes such as immunology and oncology are anticipating biosimilar and generic entrants.

The Next 5 Years

Current projections through 2029 estimate the industry to continue to grow, albeit at a slower rate than the last 5-year period. U.S. medicine spending at list price is forecast to grow by nearly $400 billion, while spending at net prices is expected to grow by $116 billion. With more than half of the life sciences industry’s gross revenue being discounted, estimated discounts expand from 52% to 57% off list price. Discounts growing faster than revenues are driven by large market leaders losing patent exclusivity, increased biosimilar utilization driving branded reference product discounts, increased statutory discounts from the Inflation Reduction Act, and continued growth of the 340B program amongst other factors. Not calculated into the projections are the impact of President Trump’s Most Favored Nation policies, the impact of tariffs on the market, or other unforeseen policy changes.

By therapeutic area, many of the large net sales growth drivers of the past 5-year period are expected to slow. While still growing over the next 5-year period, the rate of growth for specialty product areas like immunology (-4%) and oncology (-2%), or traditional areas like diabetes (-6%) and respiratory (-2%), are expected to slow from historical trends. Obesity will continue to be the therapeutic class to watch as more patients are treated, new indications are launched, and new molecules enter the market fueling promotional investment and net price pressures.

Looking Forward

Comparing and contrasting the industry direction from the past 5 years to the next 5 years underscores the importance of understanding industry fundamentals. Whether that be the makeup of the 7 billion prescriptions filled in the U.S. in 2024, the classes that are contributing to market growth, or the spread economics that drive net prices, all are critical components to understanding how the U.S. life sciences industry operates. While complex, having a sophisticated data-driven perspective makes for informed conversations, stronger strategies, and ultimately a better measurement of manufacturer and industry performance.

Glossary

30-day equivalent prescriptions - Not all prescriptions are written for a one-month period. For example, normalizing for partial prescriptions and 90-day prescriptions allows for a common baseline for aggregation. It is determined by dividing the total number of days’ supply by the number of days in a 30-day period.

Product - Unique combination of manufacturer, strength, and route of administration. One drug can be recognized as multiple products.

Brand - Generally refers to drugs marketed under a branded product name. Often these are patent protected and are the property of the innovator manufacturer.

Generic - Generally refers to drugs marketed under the molecule name. Often these are multi-sourced products that enter the market after the innovator brand drug loses patent exclusivity. Includes generics marketed with brand names.

Therapeutic Area - IQVIA classifies drugs into therapeutic areas. There are 78 standard therapeutic areas in the IQVIA universe.

Defined Daily Dose (DDD) - DDD is a method of normalizing medicines of varying intended doses developed by the World Health Organization (WHO) to measure medicine use and typically represents a standard day of therapy for a maintenance dose of a chronic therapy.

Sales at List Price - The calculation of number of drug units sold multiplied by the listed wholesale acquisition cost (WAC) for that drug.

Wholesale Acquisition Cost (WAC) - The list price set by pharmaceutical manufacturers for drugs sold to wholesalers and direct purchasers, serving as a baseline for pricing negotiations.

Estimated Net Revenue - IQVIA estimates for the net revenue that a manufacturer receives for a drug after discounts.

340B Program - A federal program that allows qualified health systems to purchase drugs at discount for outpatient utilization.

IQVIA Institute - The IQVIA Institute for Human Data Science™ contributes to the advancement of human health globally through timely research, insightful analysis and scientific expertise applied to granular non-identified patient-level data.

Commercial Analytic Libraries - A scalable, on-demand solution for life sciences teams seeking fast, actionable insights across brands, markets, and therapeutic areas. With access to over 8,000 brands and billions of patient-level claims, this platform empowers smarter decisions in forecasting, market access, product launch, and business development.

National Prescription Audit (NPA) - The industry standard source for national pharmaceutical prescription activity, NPA measures demand in terms of dispensed prescriptions to consumers across three unique pharmacy channels: retail, mail service, and long-term care. IQVIA collects new and refilled prescription data daily from sample pharmacies covering 93% of outpatient prescription activity, and projects this information to create a national estimate for all products, therapeutic classes and manufacturers.

Xponent - Provides detailed prescriber level prescription information for the U.S., including dispensed drug prescription information from retail pharmacies (chain, mass merchandisers, independent, and food stores), mail service pharmacies, and long-term care facilities. It covers 93% of the retail channel and up to 77% coverage in the mail and LTC channels using a customized and patented projection methodology to generate accurate market estimates at a state, zip code or individual prescriber level.

Longitudinal Access & Adjudication Data (LAAD) - Longitudinal Access and Adjudication Data (LAAD) is a comprehensive patient-centric dataset that brings together IQVIA's prescription, medical claims, and remittance data, to offer a simplified path to understanding the patient experience and allowing for more sophisticated analytics to support critical business decisions.