May 21, 2024
Pharmacy Benefit Management Market

Pharmacy Benefit Management Market is Estimated To Witness High Growth Owing To Increased Outsourcing Of PBM Services

The Pharmacy Benefit Management Market is estimated to be valued at US$ 858.38 Bn in 2023 and is expected to exhibit a CAGR of 6.0% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Overview:

Pharmacy benefit management refers to a type of managed healthcare, where companies create formularies and negotiate rebates and discounts from drug manufacturers and pharmacies with the aim of lowering costs incurred by insurance plans for prescription drugs. PBM companies also develop and maintain drug formularies through which they regulate which medications are covered by specific insurance plans. This helps maintain lower costs while improving patient access to medications.

Market key trends:

One of the major trends driving the growth of the pharmacy benefit management market is the increasing outsourcing of PBM services by insurers and employers. Outsourcing PBM services allows insurers and employers to focus on their core businesses rather than managing drug benefits internally. The specialized services offered by PBMs such as negotiating drug prices, developing formularies, and processing and adjudicating pharmacy claims help lower prescription drug costs for organizations. This has encouraged numerous insurers and employers to increasingly outsource their PBM needs to established vendors.

Porter’s Analysis

Threat of new entrants: The industry requires high upfront investment for branding and establishing distribution networks making the threat of new entrants moderate.

Bargaining power of buyers: Large pharmacy benefit managers and health insurers have significant bargaining power over PBMs due to their ability to switch between networks.

Bargaining power of suppliers: Drug manufacturers are dependent on PBMs for access to customers, giving PBMs strong bargaining power over suppliers.

Threat of new substitutes: New service models like white label PBMs pose minor threat as substitutes.

Competitive rivalry: Intense competition exists between major players to gain market share.

SWOT Analysis

Strengths: Economies of scale, established networks, and abilities to negotiate significant discounts and rebates.
Weaknesses: Rising healthcare costs, lack of transparency in pricing.
Opportunities: Growth in specialty drug sales, expansion into international markets.
Threats: Government regulations on pricing and profit margins, public scrutiny on non-disclosure of rebates.

Key Takeaways

The Global Pharmacy Benefit Management Market Size is expected to witness high growth, exhibiting CAGR of 6.0% over the forecast period, due to increasing healthcare spending and demand for cost control.

Regionally, North America dominated the market and accounted for around 50% share in 2023 owing to the presence of major PBM players and higher adoption of specialized services in the US. Asia Pacific is projected to grow at the fastest pace during the forecast period with China and India emerging as highly lucrative markets.

Key players operating in the pharmacy benefit management market are CVS Health, SS&C Technologies, Inc.,Anthem Inc., Medimpact, Express Scripts Holding Company, Benecard, Services, LLC, CaptureRx Inc., Change Healthcare, OptumRx, Inc., Cigna. Major players are focusing on mergers and acquisitions to expand their service offerings and geographic presence.

 

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it