In the pharmaceutical world, price hikes have been the gifts that keep on giving because the hefty cumulative effects of rising price tags greatly help year-over-year revenue growth. But a new analysis suggests the trend will slow considerably as drug makers face political pressure over pricing practices.
To wit, the compounded effect of rising prices contributed, on average, 5 percent in revenue growth annually over the last five years. Although total revenue growth slowed over the past year to around 1 percent, without price increases, the sales growth would have declined by a notable 6 percent, according to Leerink analyst Geoffrey Porges, who analyzed data for 17 large drug makers.
Here is another telling statistic about what those price hikes have meant: More than 20 percent of the $320 billion in biopharma revenue notched in the first three quarters of this year can be attributed to the cumulative effect of price increases over the last five years.
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