The global economy recovered from the most severe crisis since the Second World War. In the pharmaceutical sector, emerging countries are gaining ground. The chemical industry, especially that of Germany, recorded an exceptionally good year in 2010.
Global economy is regaining momentum – Uncertainty remains
The Organization for Economic Cooperation and Development (OECD) reported that economic growth of its 34 member states totaled 2.8% in 2010. Gross domestic product (GDP) of the United States, the world’s largest economy, grew by 2.7%, while gross national product (GDP) of the eurozone countries increased by 1.7%. Japan can look back at growth of 3.7%. On the positive side, the OECD noted that company profits, which had grown sharply, were reinvested. However, the renewed drop in real estate prices in the United States as well as growing tension in the foreign exchange markets had a noticeably negative impact.
The International Monetary Fund (IMF), which reports on the development of global economic growth, calculated an increase of 4.8% in 2010. Accordingly, the industrialized countries recorded a 2.7% increase in GDP. However, industrial output in the industrialized countries is still notably below the pre-crisis level. By contrast, the emerging and developing countries achieved a GDP increase of 7.1%. This includes the BRIC countries, namely China (+10.5%), India (+9.7%), Brazil (+7.5%) and Russia (+4%).
The IMF considers the global growth achieved to be weak because the world economy is still recovering from the deepest recession since the Second World War. By contrast, thanks to government incentives, China achieved a self-sustaining recovery fueled mainly by private sector demand. However, economists are noting real estate speculation in some parts of China, which could lead to corrections. According to the IMF, Brazil is leading the recovery in Latin America, yet its economy is currently showing signs of possibly overheating.
The IMF takes a critical view of financial market stability, which had already declined in the first half of 2010 and uncertainty is gaining ground. Growing tensions in the international currency environment as well as the expansive monetary policy of the United States pose risks. Overall, the economic recovery slowed down as of the third quarter of 2010 according to the IMF. Private demand as well as the impact of government economic incentives ending were and still are uncertainties in this context. In 2010, inflation was under 1.5% in the industrialized countries and 5.75% in the economies of emerging countries.
Pharmaceutical markets of the industrialized countries facing stronger headwind
The pharmaceutical market research firm IMS Health reported global pharma sales in 2010 of around USD 840 billion, corresponding to growth of around 4.5%. Sales in the United States, the world’s largest pharmaceutical market, totaled USD 310 billion. The more mature markets of the industrialized countries no longer showed particularly strong growth, also as an outcome of health care reforms, for example in France, Spain and Greece. Markets with high growth rates include the BRIC countries, namely Brazil, Russia, India and China, as well as Turkey and Indonesia. In 2010, emerging economics already accounted for 42% of the global growth of the pharmaceutical markets. According to IMS Health, it is becoming increasingly difficult to introduce new medicines to the market and to earn the corresponding returns on investment. IMS Health reports that in several countries, including Spain, Italy and China, regional or even local authorities are becoming increasingly influential alongside national authorities. This lengthens the time to market launch, if a product even makes it that far.
Chemical industry registers strong growth
According to the European Chemical Industry Council (Cefic), the European chemical industry grew by 10% in 2010 compared to 2009, which was a weak year due to the economic crisis. Germany was the growth engine of the European chemical industry, yet the industry has still not returned to the pre-crisis level of 2007. Global sales totaled EUR 1,871 billion in 2009. The 27 member states of the European Union were responsible for EUR 449 billion, or just 24% of the total. Accounting for 25.5% of European sales, Germany holds the leading position in this region. Globally, Asia is in first place with sales of EUR 834 billion, led by China with EUR 416 billion. Specialty chemicals, which include products from Merck, account for 26% of European chemical sales. According to Cefic data, consumer chemicals, which also include Merck products, account for 14% of European chemical sales. (The figures for 2010 will only be available after the publication of this report).
Growth weakened toward year-end since economic incentives ended in some countries. Demand outside of Europe was the main growth driver according to Cefic.
The German Chemical Industry Association (VCI) calculated growth of nearly 18% to EUR 170 billion for Germany. The approximately 1,600 member companies invested EUR 6.4 billion in plant and buildings, and spent nearly EUR 9.4 billion on research and development.
The American Chemical Council (ACC) put the volume of the largest market, the United States, at well over USD 670 billion in 2010. Exports were an important component, generating a trade surplus of USD 3.7 billion, compared to a deficit of USD 100 million in 2009. According to the ACC, industrial output in the emerging countries rose by 12% in 2010.