Psychedelic Drugs Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The psychedelic drugs market is expected to register a CAGR of 7% during the forecast period.

COVID-19 had a significant impact on the psychedelic drugs market. Due to the sudden imposition of the lockdown by governments worldwide during the COVID-19 pandemic, there was an increase in demand for psychedelic drugs, and people all over the world suffered from severe depression and stress. For instance, as per the WHO March 2022 update, the COVID-19 pandemic triggered a 25% increase in the prevalence of anxiety and depression worldwide. Many people lost their jobs and were confined to their homes, which exacerbated their mental health and increased market demand. Currently, since the restrictions are lifted, the issues associated with mental health are reduced. However, the market is anticipated to grow due to an increase in awareness of mental health issues that requires treatment with psychedelic drugs and a rise in research and development of psychedelic drugs.

The development of psychedelic drugs and increased awareness of the significance of treating issues with mental health are major factors boosting the market growth over the forecast period. The need for handling excess stress, anxiety, and other mental disorders plays a vital role in the market's growth. Because psychedelic drugs offer new mechanisms to address mental illness, some have shown promise, whereas other treatments have been ineffective. Government initiatives, alliances, and awareness programs associated with mental health are anticipated to boost market growth over the forecast period. For instance, the Mental Health Foundation has set the theme and organized and hosted Mental Health Awareness Week for the last 22 years, during which time the event has grown to become one of the biggest awareness weeks across the UK and globally. In May 2022, Mental Health Foundation conducted Mental Health Awareness Week under the theme' loneliness', as it is anticipated to explore the experience of loneliness, its effect on mental health, and how people can all play a part in reducing loneliness in the communities. Hence, these programs increase awareness related to the treatment of mental disorders such as depression, anxiety, bipolar disorders, and other severe mental health issues that require the use of psychedelic drugs. Thus, this boosts the drug demand, thereby driving the market.

Mental health issues are one of the major factors boosting the market growth over the forecast period since mental health issues like anxiety and depression, psychosis, and some forms of panic attacks require treatment with psychedelic drugs. For instance, as per the State of Mental Health in America 2022 report, the number of youths experiencing a severe major depressive episode (MDE) increased by 197,000 from the 2021 dataset. Thus, the rise in the incidence of depressive disorders leads to a surge in demand for psychedelic drugs, which thereby boosts the market growth over the forecast period. Furthermore, research studies stating the benefits offered by psychedelic drugs in various fields of mental illness are anticipated to boost market growth as there is an opportunity for many researchers to understand the advantages of psychedelic drugs. For instance, the study published in May 2021 by PubMed stated that the studied randomized clinical trial found that psilocybin-assisted therapy was efficacious in producing large, rapid, and sustained antidepressant effects in patients with major depressive disorder.

Hence, due to the rise in awareness regarding the importance of treatment of mental illnesses and the rise in research and development of psychedelic drugs, and the growing acceptance of psychedelic drugs for depression, the psychedelic drugs market is likely to witness growth over the forecast period. However, the increasing side effects of psychedelic drugs and the stringent regulatory framework restrain the market growth over the forecast period.

Psychedelic Drugs Market Trends

Hospitals Pharmacies Segment Expected to Witness a Growth in the Psychedelic Drugs Market Over the Forecast Period

The hospital pharmacy segment is likely to witness growth over the forecast period owing to the factors such as increasing awareness of mental health among people, psychedelic drugs requiring a mandatory prescription from a medical practitioner, and usage of psychedelic drugs for specific indications that are driving the growth of hospital pharmacies as distribution channels.

The increasing prevalence of depression and other mental disorders among the population across the globe resulted in the need for handling mental health for a better quality of lifestyle. The treatment for such mental illness conditions using psychedelic drugs is expected to drive the market's growth. For instance, as per the Mental Health America 2022 report, the number of people affected by mental illness in Texas is found to be 3.6 million in 2022. As the number of mental illness cases such as depression or anxiety increases, the chance of utilizing psychedelic drugs rises, thereby boosting the market growth. Consumers tend to visit hospital pharmacies for safe and authorized drugs, which results in the hospital pharmacies' distribution channel growth. Psychedelic drugs are highly potent, and they are considered prescription drugs. Psychedelic drugs like ketamine come under 'Schedule X,' which is a class of prescription drugs in India appearing as an appendix to the Drugs and Cosmetics Rules. These are drugs that cannot be purchased over the counter without the prescription of a qualified doctor. Hence, as psychedelic drugs are prescribed through a medical practitioner, the drugs are most commonly available through hospital pharmacies, which thereby boosts segment growth.

Furthermore, a rise in product approvals and psychedelic drugs research center launches are anticipated to drive segment growth over the forecast period. For instance, in August 2021, the University of Wisconsin-Madison launched a new research center to coordinate ongoing research and education in psychedelic compounds as evidence grows for their utility in treating substance abuse and psychiatric disorders, such as major depression and post-traumatic stress disorder (PTSD). As the development of psychedelic drugs increases, the chances of approvals and marketing and distribution through authorized hospital pharmacies increase, thereby boosting the market growth over the forecast period.

Thus, due to the rise in mental health issues, and the increase in demand for psychedelic drugs requiring a mandatory prescription from a medical practitioner, the studied segment is anticipated to witness growth in the studied market over the forecast period.

North America Expected to Hold a Significant Share and Expected to do the Same Over the Forecast Period

North America is expected to hold a major market share in the global psychedelic drugs market due to the rise in the research and development of psychedelic drugs, the increase in awareness regarding the treatment of mental health issues, and the increasing prevalence and incidence of mental disorder problems. For instance, as per the Adult Prevalence of Mental Illness (AMI) 2022 statistics, 19.86% of adults are experiencing a mental illness. Equivalent to nearly 50 million Americans. 4.91% are experiencing a severe mental illness. The state prevalence of adult mental illness ranges from 16.37% in New Jersey to 26.86% in Utah. Hence, the high prevalence of these mental disorders leads to severe health issues, which leads to the increase in demand for psychedelic drugs, thereby boosting market growth over the forecast period.

Furthermore, a rise in awareness of mental health issues that requires treatment with psychedelic drugs is expected to boost the psychedelic drug market growth. For instance, in October 2022, the Canadian Government conducted Mental Illness Awareness Week, which is a national campaign that seeks to inform and educate Canadians about the reality of Mental illness. It allows the public to address misconceptions about mental illness and improve the understanding of mental health. This, in turn, promotes public acceptance, respect, and equitable treatment of people suffering from mental illnesses while also reducing stigma. Hence, such awareness programs are likely to raise the need for taking medications, which is anticipated to boost market growth over the forecast period.

Moreover, an increase in company expansions and psychedelic treatment center launches are anticipated to greatly fuel the overall regional market growth. For instance, in March 2022, Canada-based- Delic Corporation expanded its locations for Ketamine Wellness Centers (KWC) in Salt Lake City and Reno. The KWC contains their FDA-approved SPRAVATO(esketamine) for treatment options.

Hence, due to the rise in mental illness, the increase in awareness programs relating to mental illness that require psychedelic drug therapy, and the surge in psychedelic drug product launches, North America is anticipated to witness growth in the studied market over the forecast period.

Psychedelic Drugs Market Competitor Analysis

The psychedelic drugs market is consolidated in nature and consists of several major players. A few major players are currently dominating the market in terms of market share. Some companies currently dominating the market include Jazz Pharmaceuticals, PharmaTher Holdings Ltd, Celon Pharmaceuticals, Cybin Corp, and Pfizer Inc., which hold substantial market shares.

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