Following a steep decline, global economic activity stabilized in the course of 2009. The pharmaceutical market still grew slightly yet the chemical industry sustained sharp losses. India and China remained growth markets.
Global economy in crisis
At the end of 2008 and the beginning of 2009, the global economy and global trade experienced the strongest collapses since World War II – perhaps even since the Great Depression. Globally, central banks lowered their interest rates and supplied banks with liquidity to a virtually unlimited extent in order to replace the interbank markets, which had dried up. In parallel, governments propped up the distressed banks by issuing guarantees and making capital injections, and they raised the level of guarantees for private bank account balances. In addition, governments around the world set up programs in order to support and boost their economies. Many countries increased their debt levels substantially for this purpose, which in the opinion of many economists represents a greater threat to the global economic system than the financial crisis.
Global economy shrinks – Growth in India and China
For 2009, experts assume a decline in average global economic output. Whereas growth resumed in many countries in the second quarter, and no later than the third, this did not compensate for the steep drop at the beginning of the year.
In January 2010, the International Monetary Fund (IMF) reported that the global economy declined by 0.8% in 2009. Gross domestic product (GDP) decreased by 2.5% in the United States and by 3.9% in the euro zone. However, according to IMF estimates, India achieved an increase of 5.6% and China even grew by 8.7%.
The Organization for Economic Cooperation and Development (OECD) assumes that GDP decreased by 3.5% for all of its 30 member countries. In terms of GDP, the U.S. economy contracted by 2.5%, the Japanese economy declined by 5.3% and the GDP of the EU OECD member countries decreased by 4%.
Pharmaceutical market hardly affected by the crisis
The market research firm IMS Health assumed that in 2009, the global pharmaceutical market achieved a volume of between US$ 775 billion and US$ 785 billion with growth ranging between 5.5% and 6.5%. This volume exceeded the expectations of April 2009 amounting to US$ 750 billion, but fell short of the optimistic forecasts made in October 2008 of more than US$ 820 billion. According to IMS calculations, the U.S. pharmaceutical market also grew more strongly than expected and achieved an increase of between 4.5% and 5.5%. In April 2009, IMS had assumed this market would decline by 1% to 2%.
In 2009, growth in countries in which medicines are reimbursed by government health care systems was less affected by the financial and economic crisis. This applied for instance to Germany, Japan and Spain. By contrast, in countries where patients largely finance their health care themselves, such as Russia, Mexico and South Korea, the pharmaceutical market grew at a slower pace.
In the consumer health care business with over-the-counter (OTC) pharmaceutical and health products, both China and Russia moved into the ranks of the top ten countries worldwide. In 2008, sales growth of the OTC market for the first time exceeded that of the prescription drugs market. Consequently, the consumer health care business could become attractive to big pharmaceutical companies again, especially since according to the market research firm Nicholas Hall, the consumer health care market grew by 3%.
Chemical sector suffers owing to economic downturn
According to calculations by the VCI (German Chemical Industry Association) global chemical output, including pharmaceutical substances, decreased by 3.1% in 2009. Japan and Germany were at the bottom of the ranking, sustaining declines of 9% and 10%, respectively. The EU recorded a decline of 4.9% and the United States a decline of 4.2%. India and China stood out positively with chemical output rising by 6.7% and 7.2%, respectively. The VCI reported that sales by the German chemical industry fell by 15%.
The CEFIC (European Chemical Industry Council) noted a 12% drop in European chemical output in 2009 as compared with a decline of 4.5% in 2008. These figures exclude the production of pharmaceutical substances.
According to CEFIC data, manufacturers of inorganic products suffered especially from the 20% collapse in output, followed by polymer producers, who experienced a drop of just under 20%. Manufacturers of consumer chemicals fared best, whose output declined by 6.5%, followed by that of specialty chemicals producers. The latter two are more or less the segments in which Merck is positioned with the Chemicals business sector.
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