How can you protect your business when the economy shifts?

Get A Trade Credit Insurance Quote

Our international team of trade experts is here to help. Contact us to learn more about our coverage options for the Pharmaceuticals Industry or request a free, no obligation quote that includes credit reports for your largest trade partners.

Pharmaceuticals Industry

pharma industry

Output and sales growth is predicted to pick up in 2024. Global pharmaceuticals output growth slowed to just 0.5% in 2023 – after a whopping 17.3% increase in 2021 and 6.8% in 2022. This spike was driven by the massive production of COVID vaccinations. In 2024, we expect global output and sales to increase by 4.6% and 5.1% respectively, mainly driven by the Asia Pacific region. Vaccine production will continue to support growth, although at a lower level than in previous years. Producers of specialty products, medicines for chronic conditions and generic drugs will find opportunities for growth among aging populations.

Producers of medication for weight-loss are facing growth predictions of more than USD 75 billion by 2030. Improving access to healthcare within emerging markets will also support pharmaceuticals’ output and sales. Ongoing demand will be driven by the aging population that will continue to fuel sector growth in the future. Baby Boomers (now aged 59-77) will become more dependent on pharmaceuticals as they get older. The surge in demand for weight-loss drugs will also benefit some major US pharmaceuticals producers.

The Biden government wants to strengthen supply chains, reshore production, and reduce reliance on imports of active pharmaceutical ingredients (API). While this could trigger additional sector growth, reshoring pharmaceutical production is not simple. Regulatory issues and the ongoing cost-advantages of retaining large-scale API factories overseas are dampening appetites for change.

pharmaceutical patents
Upcoming Patent Cliff

The top 15 blockbuster patents will expire over the next decade. Producers of brand-name drugs are likely to increase their R&D spending as they seek to develop new patents. Profits could decline if they are not able to reduce costs or introduce alternative products to increase gross margins.

pharma public health spending
Public Health Spending

Many governments are trying to contain or cut public healthcare costs (including via price controls). This price pressure could impact investments, given the high costs of developing new drugs. Some markets including the EU, US and UK are imposing new or revised drug pricing regulations in a bid to lower state healthcare costs. This is meeting some resistance from the industry, which argues regulated pricing could impact their ability to invest in R&D.

pharma environmental concerns
Environmental Concerns

Some pharma businesses could face rising pressure from environmental activists highlighting issues such as pharmaceutical residues that are contaminating water and soil.

Labor Shortages & Government Pressures

The Inflation Reduction Act authorizes Medicare to engage in price negotiations with pharma producers and ten medicines have been selected for price cuts. A further 50 will be chosen over the next four years. Some of the pharmaceutical companies in the industry have objected to the price regulation of medicines, arguing that it could impact investment and reduce innovation. Some pharmas have filed lawsuits to challenge the new regulations.

pharma product liability
Product Liability Risk

This can affect manufacturers, distributors and retailers, and has especially been seen in areas such as the recent opioid settlements.

pharma household incomes
Squeeze on Household Incomes

Consumer spending on discretionary drugs such as over-the-counter-medicines will slow due to the squeeze on household incomes, a weaker labor market and tighter lending conditions.

Curious About Pricing?

Atradius is here to help. Contact us to learn more about our coverage options or request a free, no obligation quote that includes credit reports for your largest trade partners.

Benefits to Credit Insurance

Trade credit insurance is a risk management tool that can help protect your company’s commercial accounts receivable from the devastating effects of loss caused by a bankruptcy or protracted default of your buyers. No company wants to face the unknown. At Atradius, we give our clients peace of mind knowing that their policy protects them from a customer’s sudden inability to pay. Especially in an industry that must adhere to high-cost environmental regulations, trade credit insurance can help with cash flow and to ensure companies are financially stable.

Risk Management

Atradius analyzes industry trends and the risk of every buyer to ensure you are working with stable customers. If a previously stable customer starts showing signs of deteriorating payment trends, Atradius alerts you right away so you can take steps to protect and insure your accounts receivable. By evaluating the supply chain from every angle Atradius can alert clients to trouble coming down the pipeline before there is a loss.

Bank Funding

Companies in the midst of an intense growth phase may need to put up accounts receivable as capital to receive additional funds from a bank. Having a trade credit insurance policy with Atradius that mitigates your risk means banks are more comfortable loaning the funds you need.

Enhanced Credit Management

Atradius can offer companies a team of experts to support their trade credit insurance needs. Atradius is a global company with a presence on every continent. With innovative services and practical tools to manage a company’s receivable and build the foundation for solid business growth and success.

Get Your Questions Answered or Request a Quote

Atradius is here to help. Contact us to learn more about our coverage options or request a free, no obligation quote that includes credit reports for your largest trade partners.