This analysis shows that the impact of demographic change on per capita pharmaceutical expenses is low, with a growth of only about 0.5% p.a. from 2004 to 2050. At first glance, this contradicts the leading opinion that demographic change will lead to a substantial increase in health care expenditures
[23, 24]. What appears even more surprising is that the relevant differences in projected fertility rates for Germany and France, 1.4 and 2.1 respectively, do not appear to make any difference at all. Does this mean that demographic change will not lead to higher expenses in our health care systems, and that the relevance of fertility rates on the health care system is overrated?
The answer to that question is not as simple as the results of this study may indicate. With respect to per capita expenses for pharmaceuticals – in a scenario where only the demographic structure changes and all other components stay the same, especially pharmaceutical costs per head for each age group – the answer to the two questions above is yes. Demographic-induced expenses for pharmaceuticals per capita will grow only slightly, independent of the different fertility rate scenarios.
However, there are four additional aspects to consider: a) consumption / product mix changes, b) development of overall market size, c) financing, and d) changes in other relevant factors.
Ad a) Consumption / product mix changes
While overall expenses per capita do not change a lot under the analyzed scenario, the changes per age group do change quite significantly, as shown in graphic 3. In this graphic, it can be clearly seen that lower age groups lose weight (more in Germany than in France, as a result of a lower fertility rate), while higher age groups grow of significance. Since the pharmaceutical products used in those age groups typically differ, the overall consumption pattern will also change, placing a higher relevance and demand for products that are targeted more towards the elderly. For the pharmaceutical industry, this results in a changed product mix, and hence leads to a reallocation of research and development expenditures.
Ad b) Development of overall market size
While the per capita expenses change only slightly at an almost identical rate between the two countries, the overall markets develop differently. In Germany, a lower population (−7.8% in the projected scenario) leads to a market decrease, which is partly offset by the projected increase of 26% in per capita expenses, leading to a total increase of 16% over 46 years [Table
2]. This implies almost a stagnation of the overall market size, based on the demographic development alone. In France, a growing population of projected 25%, combined with slightly increased per capita expenses of 24%, lead to a projected market growth of 55% over 46 years [Table
4]. While the annual growth rate is low as well, from a macroeconomic perspective, the implications of demographic change let the French market appear more promising to providers of pharmaceutical solutions.
Ad c) Financing
Although expenses per head grow slightly, the percentage of contributors to beneficiaries in both health care systems decreases. This means that both countries will be encountering a challenge in financing these slowly growing expenses in the future. The ratio working population to non-working population is decreasing in both countries due to an overall aging in both countries. Taking the ratio of “people between 20 and 59” versus “people below 20 and above 59 years of age” as an approximate indicator for the working age-population in these countries, this ratio decreases in Germany from 1.22 in 2004 to 0.87 in 2050 which corresponds to a decrease of contributors of approximately 29%, while in France the ratio decreases from 1.19 in 2004 to 0.79 in 2050 (34%). This implies that either the cost of health insurance per head needs to increase from 2004 to 2050 to finance the implications of the change in the demographic structure
[25, 26] (even more so in France than in Germany), or that the providers of pharmaceuticals have to find additional payment opportunities outside the public health insurance systems, such as marketing their products more directly to the end-user within existing legal restrictions.
Ad d) Changes in other relevant factors
To isolate the impact of the change in the demographic structures on pharmaceutical expenses, this study assumed that other factors remain constant. The results of that analysis are stated above. In addition to the findings of this study, there are other relevant factors such as medical progress, a change of consumption patterns within each age group over time
, new products for higher age groups, price caps for certain products, duration of patents for new products, the relevance of generic drugs, and many more that can have further impact on the overall development of pharmaceutical expenses
[28–30]. In the past decades, these factors have led to growth rates that were significantly higher than those resulting from demographic change alone
[23, 31]. This implies that the development of pharmaceutical expenses is more dependent on those other factors, than on demographic change (fertility, mortality and migration rates).
With respect to demographic change alone, the pharmaco-economic implications are:
In terms of market growth, France appears to be a more interesting market for pharmaceutical companies in the future than Germany,
A shift in the medical needs: Pharmaceutical companies will have to base their research more and more on indications aiming to help diseases of the elderly to address the growing significance of those age groups with respect to their product offerings,
Price pressure leads to a growing demand for efficiency and low-cost providers (generic drugs) and increases the relevance of marketing and sales within existing legal restrictions. Further, there appears to be a growing need to find income sources outside the public health care systems, such as out-of-pocket payments from the patient or additional private insurance .
Nevertheless, medical progress and behavioral factors may boost the demand for pharmaceuticals beyond the impact of demographic development alone.
All the discussed findings are based on two already mentioned limitations. Firstly the demographic effect is considered as the only driving factor for pharmaceutical expenses until 2050 and other effects are neglected. Secondly the reference year for the data is 2004. The reasons for using 2004 as the reference year were already described in the methods section.