SOURCE: Kalorama Information

Kalorama Information

June 15, 2009 16:43 ET

Unemployment Rate Hurts Some Healthcare Industries, Helps Others

NEW YORK, NY--(Marketwire - June 15, 2009) - A higher unemployment rate and the resulting increase in the ranks of the uninsured, will mean more pain for consumers and for the traditional pharmaceutical industry business model, according to a new research study by healthcare market research company Kalorama Information. Most notably, out-of-pocket spending on healthcare should see an increase, driving consumers to OTC drugs and generics and to seek healthcare at "retail clinics," as detailed in Kalorama's new report "Healthcare in a Recession (OTC, Generics, Out-of-Pocket Spending, Healthcare Legislation, Retail Clinics, Outsourcing and Other Topics)."

With the U.S. unemployment rate at 8% customers will be paying more of their own healthcare bills. Kalorama Information estimates that consumers will spend about $283 billion in non-elective out-of-pocket healthcare costs between co-pays, premiums, and cash or check payments for prescription drugs and other services. Since the bulk out-of-pocket costs are for prescription drugs, this is an area where unemployed and underinsured consumers will be more discriminating.

"Out-of-pocket healthcare spending was already increasing in good times, and now with high unemployment, consumers will be reaching into their pockets even more to fund their healthcare," said Bruce Carlson, Publisher of Kalorama Information. "When it's their money they are spending, it's reasonable to expect they will look to medicines on the shelf and off-label where possible."

While the pharmaceutical industry is expected to see reduced sales of prescription drugs, Kalorama estimates US generic sales will be $18 billion in 2009, a 10% increase over last year, as consumers, health plans and the Obama administration seek to lower the costs of healthcare by substituting generics. Revenues to manufacturers of OTC drugs are estimated to be up 18% this year, due to consumers' desire to avoid the time and cost of office visits.

"It might be a rough time for the large branded drug makers, but not for everyone," said Carlson. "Large Pharma companies with generic and OTC divisions will benefit on that side of their business. Recent innovations like healthcare credit cards and in-store medical clinics will also find a perfect climate in this market."

Indeed, Kalorama predicts that 25% of out-of-pocket healthcare costs are now being paid on standard credit cards, signaling opportunity for finance companies with creative arrangements for consumers to finance healthcare purchases.

Kalorama Information's new report, "Healthcare in a Recession," discusses the impact of the recession on various aspects of the healthcare market including drug manufacturers, diagnostic companies, and healthcare organizations. Our analysts also look at how various federal healthcare plan scenarios might impact parts of the healthcare industry. For further information visit: http://www.kaloramainformation.com/redirect.asp?progid=70411&productid=2123096.

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