IMS Reports 8.3 Percent Dollar Growth in 2004 U.S. Prescription Sales; Biotech Remains Industry Growth Engine, With 17 Percent Sales Growth.

FAIRFIELD, Conn. -- IMS HEALTH (NYSE: RX), the world's leading provider of information and consulting solutions to the pharmaceutical and healthcare industries, today announced that U.S. prescription drug sales grew 8.3 percent to $235.4 billion in 2004, compared with $217.3 billion in sales the previous year. The volume of total U.S. dispensed prescriptions grew 3.2 percent after adjusting for longer-duration mail order prescriptions, a modest increase over 2003. Prescription product sales (at wholesale prices) and dispensed prescriptions are derived from the IMS(R) National Sales Perspectives(TM) and the IMS(R) National Prescription Audit(TM) services, respectively.

"This is the first year since 1995 that the pharmaceutical industry has scored less than double-digit growth," explained Bruce Boggs, president, IMS Americas. "However, the industry delivered solid performance overall despite significant business pressures in areas such as drug safety, pricing and generics competition."

Growth Factors

Key factors for the 2004 pharma industry's more modest growth included: a mild flu season; increased over-the-counter use of anti-ulcerants and antihistamines, a practice encouraged by managed care plans; continued generics competition; decreased prescription volumes due in part to increased insurance co-pays; and safety concerns with antidepressants and COX-2 inhibitors.

Biotech remained an industry growth engine in 2004, with sales increasing by 17 percent. Notable contributions came from Bristol-Myers Squibb/Imclone's Erbitux(TM) and Genentech's Avastin(TM), both colorectal cancer drugs.

The generics segment also grew well last year; however, slower sales growth year-over-year highlighted the segment's volatility. "Generic dollar sales grew by only 10 percent in 2004, a dramatic slowdown from prior years when generics growth topped 26 percent," according to Ana-Maria Zaugg, IMS corporate vice president.

Merck's surprise, voluntary withdrawal of Vioxx(R) in September and potential safety concerns associated with other pain relief medications resulted in doctors switching patients away from Vioxx or starting them on other COX-2 products. Patient volume for the remaining COX-2s initially increased by more than 25 percent following the withdrawal, driven by a 15 percent increase in new therapy starts and a two-thirds share of all Vioxx switches.

"Over time, COX-2 usage has declined to below pre-Vioxx withdrawal levels, due in part to further safety concerns about this class of drugs," said Lisa Morris, global director, IMS longitudinal services. "By year-end, the prescription COX-2 and NSAID market saw a 9 percent decline in total patients. This demonstrates how critical it is for pharmaceutical companies to effectively manage their drugs' risk/benefit profile." Anonymized longitudinal prescription information was derived from the IMS National Prescription Audit(TM) Market Dynamics(TM) service.

Medicare and Importation

While Medicare and drug importation were among the most debated industry topics of 2004, their impact on overall pharmaceutical results was minimal.

On the Medicare front, seniors (65 years and older) grappled with multiple discount card choices, making adoption and conversion slow. By year's end, only 1.2 percent of retail prescriptions and 5.1 percent of senior retail prescriptions involved the use of Medicare discount cards, which were launched in June 2004. Despite the slow uptake, the cards have been effective in lowering users' prescription costs, with discounts averaging 20 percent for branded drugs and 33 percent for generic drugs.

The growth of drugs imported from Canada slowed to 9.7 percent. With sales at less than 1 percent of the overall U.S. pharmaceuticals revenues, this had only a small influence on the industry's current performance, said Zaugg.

New Products

Last year's sales growth hinged on market traction from new products. Among the notable new products introduced in 2004 were several potential blockbusters, including Eli Lilly's Cymbalta(R) (for depression), Genentech's Avastin(TM) (for colorectal cancer), Forest Laboratories' Namenda(R) (for Alzheimer's disease), Bristol-Myers Squibb/Imclone's Erbitux(TM) (for colorectal cancer) and Merck/Schering-Plough's Vytorin(TM) (for cholesterol reduction). The full impact of these launches, however, will not be felt until later in 2005.

"Combination drugs were an interesting way for pharma to innovate and extend brand life, as in the August launch of Vytorin(TM), Merck/Schering-Plough's statin and cholesterol reducer combination, which achieved sales of $90 million through year-end," explained Morris. "Vytorin's performance in 2005 will likely determine its overall success. Pfizer's Caduet(R), a combination therapy for the treatment of hypertension and high cholesterol, exhibited slower acceptance in the marketplace."

New molecular entities approved in the U.S. last year increased to 31 from 21 in 2003, including several innovative therapies for chronic diseases such as cancer and Alzheimer's.

Future Outlook

Looking ahead to 2005 results, IMS forecasts that the U.S. pharmaceutical industry will continue to grow at a steady rate of 7.5 to 8.5 percent. This projected rate is on par with the global pharmaceutical industry's compounded annual growth rate, which is projected at 7-10 percent through 2008 (IMS estimate as of September 2004). New product innovation, the aging U.S. population and an attractive list of potential blockbusters will help to sustain this growth.

Seven new products with potential global blockbuster status (over $1 billion in sales) are expected to launch in the U.S. this year: Eli Lilly's Alimta(R) (for lung cancer), Pfizer's Lyrica(TM) (for neuropathic pain), Novo Nordisk's Levemir(R) (for diabetes), GlaxoSmithKline's Ariflo(R) (for asthma/chronic obstructive pulmonary disease), Sanofi-Aventis' Menactra(R) (for meningitis), Genentech/OSI's Tarceva(TM) (for lung cancer) and Roche/GlaxoSmithKline's Boniva(TM) (for osteoporosis).

"2005 will be another solid year for pharma, but it won't get any easier," predicted Paul Wilson, IMS vice president, Statistical Services. "The industry's results will depend on sustained innovation, new product performance and the emerging impact of government programs such as Medicare, where the prevailing attitude is one of 'watchful waiting.' This year's results will also depend on how consumers, who are becoming more active in managing their healthcare, exercise their prescription drug choices within managed care and the new Medicare programs."

Top-Line Industry Statistics and Summaries

IMS's traditional charts detailing 2004 U.S. industry performance by categories such as distribution channels, therapy classes, prescription products and companies can be viewed on the IMS website at www.imshealth.com/media. A highlight of each topic appears below:

U.S. Prescription Distribution Channels:

--The mail service channel continues to grow more rapidly than retail distribution channels for U.S. prescription drugs in 2004.

Leading U.S. Therapy Classes:

--Cholesterol reducers continue to be the top therapeutic class and are achieving above-average growth.

Leading U.S. Prescription Products by Sales:

--Pfizer's Lipitor(R), a cholesterol reducer, continues to be the biggest-selling product in the U.S. for the fourth year running, while AstraZeneca's Nexium(R), Sanofi-Aventis/Bristol-Myers Squibb's Plavix(R) and GlaxoSmithKline's Advair Diskus(R) all delivered double-digit growth.

Largest Pharmaceutical Companies by U.S. Prescription Sales:

--The rank order by U.S. sales of the top five pharmaceutical companies in 2004 remains unchanged, and Sanofi-Aventis joins the top ten.

About IMS

Operating in more than 100 countries, IMS is the world's leading provider of information solutions to the pharmaceutical and healthcare industries. With $1.4 billion in 2003 revenue and over 50 years of industry experience, IMS offers leading-edge business intelligence products and services that are integral to clients' day-to-day operations, including marketing effectiveness solutions for prescription and over-the-counter pharmaceutical products; sales optimization solutions to increase pharmaceutical sales force productivity; and consulting and customized services that turn information into actionable insights. Additional information is available at http://www.imshealth.com.