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Pharma’s Fastest Growing Customer Base

Ageing Posted on: 15 Aug 03


The increase in life expectancy coupled with a decreasing birth rate will place considerable pressure on governments and healthcare providers. Governments are having to reassess how they allocate their healthcare spending given that on average, the over 65s require four times as much healthcare resources as younger people.

The increase in life expectancy

Medical and technical advances combined with changes in lifestyle have led to dramatic reductions in mortality rates over the past 50 years. According to the Organization for Economic Cooperation and Development (OECD), the life expectancy in many industrialised countries rose from around 40 years in the early 1950s to almost 62 by 1990 (1). A speech by the UK’s Science Minister, Lord Sainsbury, dramatically illustrated this point with the fact that a person born in the 21st century can now expect to live 30 years longer than someone born in the 19th century (2)

The increase in life expectancy coupled with a decreasing birth rate will place considerable pressure on governments and healthcare providers. For example, in Japan although its population will start to decline after 2006, the elderly population (aged 65 or above) will continue to increase up to 2050 (3). Governments are having to reassess how they allocate their healthcare spending given that on average, the over 65s require four times as much healthcare resources as younger people (4).

The challenge for the pharmaceutical industry

However, it is not only governments that will face challenges due to population ageing. Pharmaceutical companies must take account of the changes in population demographics when developing new drugs and marketing them. As drug development times lie between the 10 and 12-year range, information on diseases of the elderly and the lifestyles of the over 65s will need to be factored in to R&D decision-making and marketing strategies.

Demographic and healthcare spending data confirm the importance of reaching seniors (65+) and their healthcare providers with effective marketing. The ageing marketplace still remains a tremendous growth opportunity for an industry seeking to offset losses from lagging late-stage product pipelines.  For example, in the US, coronary heart disease accounts for 70-80% of deaths in men and women in adults over 65, and congestive heart failure (CHF), is the most common cause of hospitalisation for the elderly (5).

Industry figures regarding drug pipelines show that the pharmaceutical industry has reacted to demographic changes in R&D terms. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), in 2002, 135 biopharmaceutical companies were developing 294 new treatments for such debilitating conditions as Alzheimer’s disease, arthritis, osteoporosis, and Parkinson’s disease (6).

Yet just because there will be large populations at risk from these types of diseases does not mean that the pharmaceutical industry will face an easy time in marketing its products as pricing is becoming a contentious public issue. It has been shown that US consumer spending for prescription drugs increases with age (7). In 1999, spending by the over 65s on prescription drugs was nearly double that of the average spent by all consumers (7). However, it is worth pointing out that the same report showed that compared to other daily expenses such as housing, transportation and food, prescription drugs represented a relatively small part of total consumer household spending (7).

Nevertheless many seniors have criticised the high prices that they pay for prescription drugs and are hoping that the government will help drive down costs. In a 2002 US pre-midterm election survey carried out by Ayres, McHenry & Associates, Inc., healthcare and drug benefits were considered the most important national issue for Americans 65 and older (8).

Marketers must determine where seniors will use the medication-and then find out who will select the product and where it will be dispensed. Most people over 65 receiving healthcare services are located in community care settings and not in hospitals or nursing homes. Effective marketing campaigns should inform decision makers who initiate therapy in hospitals as well as those who prescribe medication in nursing homes, where therapy is often continued. Otherwise, a patient may be started on one agent in the hospital and then switched to another upon admission to a nursing home.

Taking account of social objectives

As populations age, governments will be under pressure to provide adequate healthcare services and to fund new drug treatments. However, equally, pharmaceutical companies will be under pressure to justify the prices they charge for novel medicines and to reassure patients that they are trying to make a valuable contribution to their wellbeing. For example, a 2002 survey by Ipsos-Reid revealed that many consumers were split on whether the R&D efforts of pharmaceutical companies justified their high prices (9). In the US the approval rates for the pharmaceutical industry’s pricing argument was 47 percent, with these approval rates dropping with age. Therefore, companies must show that their business strategies are in line with social healthcare objectives.

There are several ways to implement a successful marketing strategy to the ageing market: identifying all the decision makers and how they influence care and prescribing; defining the needs of and appropriate messages for those key customers; closely analysing the potential benefits of any product marketed to the older population and to the providers caring for them and understanding the level of healthcare necessary to this target population.


  1. Kermani F. and McGuire S. (2002/2003). TransPharma, Volume 1, Issue 2, pp 34-37.
  2. Launch of Ageing Population Panel Report. June 13, 2000. Department of Trade and Industry.
  3. Nagae T. (2003). Prediction of the Number of Hypertension Patients in Japan. Pharma Japan No. 1843: 1 – 7.
  4. Gerdtham, U-G et al. (1994). Factors affecting health spending : a cross-country econometric analysis. OECD/GD (94) 101.
  5. Cardiovascular Disease in the Elderly. Mayo Clinic Rochester.

Dr Faiz Kermani

Last updated on: 27/08/2010 11:40:18

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